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To: Rarebird who wrote (37752)	7/25/1999 11:13:00 AM
From: Rarebird	Read Replies (2) \| Respond to of 116764

Very interesting large inverse head and shoulders pattern on the XAU: securitytrader.com

To: Rarebird who wrote (37752)	7/25/1999 1:02:00 PM
From: C.K. Houston	Respond to of 116764

CHAPTER VII. A View From Wall Street Naval War College Think Tank The biggest pro-crash argument concerned oil, and the argument was an unusual one. Most participants were sanguine about the oil companies themselves and the shipping of oil over the seas, whereas the biggest concern revolved around the transshipment ports and specifically, the record keeping or "admin." The reality is that it doesn't take much of decrease in the flow of oil, for example, into the United States to trigger short-term price rises. A slowdown in the range of only 5 percent is sufficient to send gasoline prices significantly upward, according to Department of Energy representatives, and once that happens, the economy adjusts accordingly to account for higher cost in such a crucial commodity. In short, that price rise alone is enough to make Wall Street sit up and take notice of the possibility of a Y2K-induced downturn ... Another pro-crash argument centered around the enterprise software systems that allow for the just-in-time supply chain margins that have come to define the New Economy ... Another pro-crash argument concerned countries with xenophobic tendencies. In short, those states that have a hard time letting outsiders help may be in for the harder times ... Finally, there was the sense that International Financial Institutions like the World Bank and IMF would be forced, for lack of funding, to turn a deaf ear to those states suffering Y2K-induced economic crashes that had not "cleaned up their acts" following the 1997-98 Global Financial Crisis ... Moving on to the anti-crash arguments, the first and most obvious one offered was that the markets would naturally take Y2K into account when forecasting 1st Quarter earnings estimates, with consideration given to firms that experience unusually high volume in the last two quarters of 1999 and suffer a dearth of sales in the first due to a combination of Y2K disruptions and the inevitable draw down of stockpiled supplies ... A second anti-crash argument cites a perceived but not yet proven IT "lockdown" by major firms, meaning a freeze on IT purchases through the last two quarters of 1999 until Y2K passes ... Another anti-crash argument notes the usual "January effect" whereby markets, responding to positive earnings reports from the previous year's 4th Quarter, tends to look rather optimistically toward the future year, especially if the markets end up in positive territory after the first business week (historically a good sign of positive returns for the year) ... Finally, participants predicted that the IMF, World Bank, and the US Treasury would work hard to protect those emerging economies that had suffered much in 1997-98 but had "cleaned up their acts" as a result ... What's the Likely Long-Term Market Impact from Y2K? ... [more] geocities.com Cheryl 159 Days until 2000

To: Rarebird who wrote (37752)	8/3/1999 4:35:00 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116764

When Investment exceeds savings we eventually get inflation. Wait.. so all of that money folks are putting into 401ks and IRA for retirement is not "savings"?? Just because it is not currently being invested in bonds does not mean that it is not reflective of a population that is not saving. It just is stating that investors are seeking the best returns and that bonds are not yet sufficing or that people's expectations are skewed toward stocks. A crisis, such as Y2K occurs, and credit and money will contract, banks will foreclose, gold will soar, investment will halt, pessimism will be rife, cash holdings will increase ( somewhat questionable in the year 2000 due to the extent of the damage of Y2K); thus savings will now exceed investment. All of which would be contractionary to economic activity, as well as putting the brakes on the velocity of monetary transactions. That is not good for gold. That, in fact, would DICTATE that those who hold gold would be seeking to raise cash by selling ANYTHING of relative value (like brokers who sold their assets at firesale prices to cover their margin debt after the '29 crash) To be sure, a sudden and significant demand for cash reserves due to Y2K will have a great deflationary effect. It is the general uncertainty of the market that creates the demand for cash balances. We are now in the initial stages of this uncertainty. You've seen what deflation does for gold. We've seen it over the past several years since Japan's bubble collapsed. Cash is not gold. Gold is an asset and assets get sold when cash is in short supply. Illusions have been created that one can create wealth out of bank credit. Rarebird, you should go and converse with some of your colleagues in the Business Administration dept of your former university. If I buy a car on credit, I have essentially created a quantity of money that I will repay over time. Instead of having cash to make the purchase, I borrow money which in essence reflects currently the cash I would have 4-6 years in the future should I have opted to save that money and pay cash for a car at that time. That is creating wealth and debt. I create debt for myself, but I have use of the product now. I create wealth for the manufacturer because I'm buying their product now instead of waiting until I have saved the money to make an all-cash purchase. A debt is nothing more than a reflection of your potential wealth either in the future or over time. You create wealth now that would have to be created over a period of years. And so long as you continue to have a job, which signifies the ability to accumulate wealth, you essentially have that wealth now and not later. That is why it is key to maintain employment and business growth. Without it, debt, which represents potential wealth realized being realized currently cannot be serviced and that wealth is destroyed through loan default. Money/Wealth is destroyed. Factor incomes raise the prices of consumer goods and thus the rate of return in the lower stages of production which leads to factors being attracted away from the higher stages, adding to their cost pressures. We now get the situation of rising prices, idle capacity and rising unemployment. That is, Stagflation. It is quite correct to assume that a massive Y2K induced disruption of major commodities could lead to significant price hikes. However, that would require business activity to remain constant which is just not foreseeable in such an event. Demand for anything but essential goods would collapse as people hunkered down and found anyway possible to raise cash. If Y2K terribly disrupts the world, business will contract due to their inability to obtain credit. And since oil is denominated in US dollars, which economies will suffer the greatest damage?? It won't be the US... It will be Japan, and any other non-oil independent industrialized nations who have to pay for their oil in dollars. We will have the advantage currency to help us over the hump (knock on wood). Who knows, we might even see the US dollar backed up by oil... <VBG> But you're stagflation scenario really takes into account factors that are not being reflected in the current marketplace. No one knows what Y2K will bring or how severe or lengthy the disruptions, if any, will be. And most of Wall Street seems to be ignoring Y2K warnings so I don't believe they are factoring in a stagflation like your proposing. And btw, should the computers shut down, an alternative scenario would be that more manpower would be required and that wage inflation would take off as well.. But that would also spur greater consumer demand since they would have more money. There is a labor shortage after all. Again, you can make up any scenarios you want, but they are not the current scenario that is being played out right now before our eyes on the markets. As you can ponder stagflation, I can theorize a complete collapse of overseas economies and a huge flight to quality for foreign capital into US t-bills. I can ponder Y2K induced disruption leading nations like China to attempt to conquer their neighbors in order to politically distract their people from their troubles. But none of that is pertinent until it happens. Hope this answers your question. Regards, Ron