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

To: Stcgg who wrote (51446)	5/21/2000 10:53:00 AM
From: AllansAlias	Respond to of 99985

re: Crash and an Over-heated Economy.. I do not know how things will unwind, but we have to deal with two facts: 1. Debt, both personal and government, has reached levels where we have no historical comparison to guide us. The credit-induced disaster in Japan in the early 90's gives us some clue as to where we are headed. We are all aware of the unprecedented level of personal debt, but the corporate and goverment debt is what is really mental. I do not have current figures (Hiam, heinz?), but recall reading that the world bond market is somewhere in the $30+ trillion range. In 1970 it was $1 trillion. In 1986 it was $9 trillion. 2. Derivative trading has grown since 1972 to such an absurd level, that a real crash would probably wipe out a large number of companies, some of which are thought of as "too big to fail". Recall that OTC markets, where banks are major players, are not guaranteed. I underestimated the bubble in April. When the first of the price shocks hit I bought some May puts. When we rallied after the 14th I bought some more, even though premiums were high. The bubble survived and I think I have learned a lesson that many who visit this thread already knew: Until every avenue of credit and capital inflow is exhausted, the bubble will not burst. This may indeed be a new era, but greed is driving this and greed has never allowed a graceful exit. --Allan