Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (66950)	8/29/1999 11:03:00 AM
From: Mike M2	Respond to of 132070

Tommaso, historians may have a footnote about those evil twins who forecast tough love and economic violence ho ho ho from Max Moseley " We are watching and analysing the symptoms of a much deeper disease which had already spread throughout the world long before the Asian meltdown in 1997. It is a classic debt-malinvestment problem, understandable to any student of The Austrian School of Economics, but rather opaque to all the followers of the various "perpetual motion" schools. It has been caused by excess debt creation, excess liquidity, and consequential widespread malinvestment and overcapacity. " chebucto.ns.ca

To: Tommaso who wrote (66950)	8/29/1999 11:11:00 AM
From: Mike M2	Respond to of 132070

To all some excerpts from Max Moseley's Skeptical Investor:" The consensus of judgment of the millions whose valuations function on that admirable market, the Stock Exchange, is that stocks are not at present over-valued. Where is the group of men with the all-embracing wisdom which will entitle them to veto the judgment of this intelligent multitude?" Professor Lawrence, Princeton University, 1929. "Identifying a bubble in the process of inflating may be among the most formidable challenges confronting a central bank, pitting its own assessment of fundamentals against the combined judgment of millions of investors." Alan Greenspan, 1999. chebucto.ns.ca

To: Tommaso who wrote (66950)	8/29/1999 11:17:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

To all , more moseley excerpts chebucto.ns.ca In America, what has been happening in the domestic economy is often called a "virtuous circle". I can see why, but am dubious about the use of such a term for something that looks more like an out of control feedback loop that will inevitably self-destruct. Whatever it is called though, what is certain is that it is fuelled by an inflow of foreign capital. The economy and the financial markets have become dependent, like an addict on his fix, on the continuation of this flow of funds. US households (believing that their capital gains in the stock market and mutual funds are permanent) are now spending more than they earn, thus drying up the domestic supply of capital and producing a soaring current account deficit, predicted to exceed $300 billion this year. Continuation of this inward flow depends on the continued attractiveness of dollar assets to overseas investors: and for that not only must financial asset prices continue to rise but the value of the dollar must be seen as safe to protect the value of their holdings. Lose faith in the strength of the dollar (especially with the huge amount of leveraged dollar-yen and dollar-euro "carry trade" bets out there), so the argument goes, and the direction of this capital flow will quickly reverse, triggering a surge in inflation, and bringing down the stock and bond markets.