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Strategies & Market Trends : The Stock Market Bubble -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (3089)	5/1/2000 6:54:00 AM
From: The Ox	Read Replies (2) \| Respond to of 3339

prudentbear.com ....NEW PARADIGM OR BUBBLE? What are we really looking at in the United States? A supply-driven new paradigm economy or history's greatest financial bubble masking the economy's bad fundamentals? Comparing present economic and financial conditions with those in the late 1920s is a shocking exercise. Consider that the U.S. economy in the 1920s had zero inflation for years, owing to high productivity growth. It had a persistent surplus in savings and in foreign trade, and it had strong profit growth in 1928-29. Not to forget moreover the opulent cushions of liquidity that the corporations had accumulated through stock issuance while the stock market was booming. Is this unprecedented prosperity or unprecedented illusion? And how do these economic and financial fundamentals look today? In short, they make miserable reading in every single respect. All of them are negative. What's more, negative in the extreme. Despite substantial statistical manipulations the U.S. inflation rate is above 3%, the highest rate among industrial countries. America has the lowest domestic savings of all time and the biggest trade deficit of all time. On top of being a low-saving, low investment economy, America is now a capital-consuming country, reflected in the fact that the current rise in foreign indebtedness exceeds net domestic investment. Ominously, corporate profits, as measured by the official income statistics, have been virtually flat for more than two years, even though the economy has been booming at record growth rates. The stampede of both corporations and private households out of liquidity and into debt during recent years is without precedent.