Roger,
1. The relatively low military spending is only low when looked at on a post-war basis. If you consider the pre-war period, you would find that military spending exhibited a similar pattern in the 1920s, leading up to the great depression. Historically, wars have been pretty good for the economy
Your point that we are headed to a single world economy is well taken. Up until the point when that 34% increase in Asian imports starts being felt, workers start losing jobs, and all of a sudden the world isn't one big happy family anymore. In fact, I'd consider "political action to stem the increasing Asian trade deficit" to be one of the likely candidates for pushing markets down.
2. Interest rates and money supply don't always go hand in hand. Adjusted monetary base growth has been slowing. In fact, it's pretty flat this last month. And there's talk of interest rate rises.
3. True, in so far as it goes. But this doesn't necessarily create the level of profits necessary to sustain the market at these levels. A big part of this bubble is due to the "concepts on the verge of becoming commercial." Some of them never will become commercial, and some will only enjoy moderate success. You can't value the market on the assumption that every new concept is going to work and grow boundlessly.
4. The available unused oil/gas prouction capacity is at an all time low. There is virtually no cushion in case of a disruption. A minor problem anywhere will immediately be felt in the world supply, and a major problem could leave us wishing for the relatively good times back in '73.
5. Not sure that this matters for the stock market, except as a contributory factor to your point 3.
mg |
