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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Cynic 2005 who wrote (17838)	9/23/1999 5:34:00 PM
From: Rational	Read Replies (2) \| Respond to of 18056

The real dilemma is where will the money from sell-off go? To Europe or Japan, where the markets and asset prices are already over-bloated? Large caps have been considered to be the riskless haven, like the US-Treasuries and so their prices have been rising. Every country has created a plenty of money and so the asset values have swelled to fill up to the brim of money supply. Now, if you are worried about the asset values being artificially high, the money has to be shrunk; i.e., for example, dollars, credit lines, bank loans, etc. have to be taken off the market. How will this happen? IMHO, we will see massive defaults of the kind we had never seen before. The excess money has created massive levered home buying by youngsters ... 10% equity plus 90% loan. For the first time in history, we will see massive home mortgage defaults because real income has not risen; only the stock prices have, a part of which has gone to pay for the equity to buy homes.