Haim,
We are facing the scepter of world-wide deflation for the first time since 1929. We have not encounter this big issue in the last 16 years. In '29, the lending rates went from 6% to 1.5% and that did not do anything for the market, except go down. Germany continues unwilling to cut their rates because of EMU, but they have to balance that with potential recession for the new leader. There is also potential strong competition from the EMU currency, which will keep the US dollar unstable for a while. Sick economies cannot be cured in 3 or 6 months, rather 2 years is more likely. Asia was and will be the engine for this global economic growth and prosperity, and this engine is not running. IMF infusions made thus far are only good for keeping political stability, not for stabilizing the economies, and definitely not for reviving the engine. It will take at least 2 to 3 years to fix it. In 1929, it took several years to revive the US economy, didn't it?
I agree, Dr Feel Goods Greenspan and Rubin actions will only postpone the inevitable. I am looking for the next big downdraft in March-May 99 time period. Between now and then, this market will be great for traders, and play both long and short.
By the way, Y2K problem will also take a lot of capital out of the US economy. That funds is for fixing problem and will not have produce positive growth to the companies.
BWDIK, it's only a bubba's opinion. |
