Reinflation:
Thanks again for your comments.
"The problem is, to reflate, you have to have people willing to borrow money to add more capacity. You have to have consumers willing to mortgage their future to buy beanie babies."
While Americans are clearly NOT as conservative as the Japanese are when it comes to saving/borrowing, I agree that if the stock market goes el tanko people will definitely be much more careful about what they do with their money (will they have any, since its all in the stock market?).
"You need govt. officials to ignore their chances at reelection and return to heavy deficit spending, something I see as very unlikely."
My guess is that the gov't would have to aggressively spend. Is there really that much resistance to deficits in the US? Perhaps I have been away too long, but my impression is that most people think "as long as it'g good for the stock market, to hell with everything else." I get blank stares when I try to discuss gov't deficits.
Now when the market tanks people will be even more concerned about gov't action, and I wouldn't be surprised to see people call out for gov't spending. People would gladly sacrifice the future for "pleasure today."
"Print, print, print....spend, spend, spend!!!"
Do you have a favorite "most likely scenario/chain of events" in terms of:
*Stock market prices
*Interest rates/bond prices
*Inflation
*Commodity prices
*Exchange rates
I'm trying to figure out how this will unfold on a global scale, and to be honest it's giving me quite a headache........
The world economy needs the US to keep spending, and if the DOW goes el tanko, the world could get weird quick.
On a different topic, we could have a couple of major risk factors coming up....the tanking of the US equity titanic, and Y2K. Who knows what will happen with Y2K, but it is a risk factor.
As a result of these events, things which are usually stable and may move in unexpected ways. I am looking to buy options on things that are priced for "little volatility", but which may surprise us with their sudden volatility around the turn of the millennium.
OTM Eurodollar puts seem like an interesting play if the financial markets become destabilized. Any thoughts on this and other low cost/potentially high return bets?
Thanks!
THC |
