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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (46074)	4/13/2000 7:02:00 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 99985

Heinz: One characterisitic of the bubble is that tens of millions of trusting souls now look upon Wall Street as a kindly Santa Claus that will enable them to retire rich beyond their wildest dreams -- without any real effort on their part. Boy are they in for a rude awakening!

To: pater tenebrarum who wrote (46074)	4/13/2000 9:07:00 PM
From: Andy H	Read Replies (1) \| Respond to of 99985

Heinz,that may well be. We'll never know until it happens (a derivative crisis)and what the effect would be on our economy. I just look at the economic systems and believe that the US has no parallels with Japan or 73-74. In the late 80s, Japanese banks were financing megadeals for US real estate that were a laughingstock among some large RE owners. Take the best US price and mark it up 25% and sell it to the Japanese. I worked on many transactions like these. All with Japanese bank financing that US banks wouldn't and couldn't touch. I believe the Japanese problems were and are rooted in their banking system and flawed system of restricting domestic competition and subsidizing production without regard to return on equity; high taxes and regulations/customs that do not encourage the best and most efficient use of resources. Their banks at the top had no equity since it was based on the MARKET value of securities held under a somewhat rigged stock market. In 73-74, the US economy was coming to the end of an era without foreign competition, very poor economic policy and an oil shock-none of which we were prepared for. The US banking system survived the 80-82 inflation and recession, the oil and commodity price collapses in the mid 80s and the S and L crisis and recession in 89-90 and now is in the best shape in my lifetime. I do not believe that any derivative based crisis would push the US economy into recession. Of course, who is to say-we're just speculating. Raise taxes and interest rates enough and we will get a recession. Even if there is a stock market bubble, that alone will not bring us down. The NAZ could get cut in half and only return to September 99 levels. No bubble in the Dow despite many substitutions of hotter stocks. Looking at the August 97 peak of 8200 or so and the July 98 peak of 9000+ , the Dow is only up about 10% per year the last two + years including this recent rally. I suspect the NYSE has similar or even smaller returns. The stock market is always capable of a massive decline, but without a corresponding recession/depression, it will be a relatively temporary event as in 1987. The ascendancy of the US economy will keep most of the money here. Of course, if Al Gore and Dems take over, all bets are off <ggg>.