Mythman,
Just because the bubble has proven slightly more elastic than anticipated, doesn't mean the fundamentals haven't drastically deteriorated.
The Fed is worried about the banking sector and their exposure to international debt, not the stock market nesccesarily. There was a lot of damage done to the bond market (hence the bankruptcy of CrimiMae), and those spreads are still too wide.
WSJ discussed the concerns big money managers have with investing in Brazil, despite the bailout.
We have record low commodity prices, especially in oil today, with anticipation of lower prices to come.
Debtor nations are cutting each other's throat economically in order to capture their share of a market with far too much overcapacity and no pricing power.
Debtor nations need these revenues to finance their debt to Western lenders.
Western Lenders need to buoy up the global economy, even if it means overheating the US economy in the process, in order to preserve the fundamental stability of the global financial system.
The problem... deflationary pressures are increasing... and something will have to give eventually.
Btw, have you been following the reporting in the WSJ on Y2K problems in Asian banks?? There will be an increasing Y2K premium placed upon loans to nations who have not taken aggressive action to remediate systems.
This uncertainty will add additional pressure to tighten lending standards, drying up capital, and adding pressures to international economies already in recession/depression.
With catastrophic results.
So enjoy the ride while you can...
Regards,
Ron |
