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To: Arik T.G. who wrote (644)	11/2/2000 12:39:17 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 686

ATG - ...When a company reports a $1B earnings, pays no dividend but buys back stocks with $1.5B (partly financed by loan), and the number of stocks remains the same because employees exercise their options, how do you measure the real earnings of that company, assuming there was no other creative accounting? Does this company create value?... Considering just the buyback of stocks, its justification depends on price paid and future value, just as with any other investment. Regards, Don

To: Arik T.G. who wrote (644)	11/2/2000 3:43:46 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 686

atg, hedonic pricing doesn't impact autos. the computer industry is another story. over 50% of gdp growth (and, therefore, productivity) is an illusionary, non real, number added by statisticians. >>I agree that the measurements of macro economic quantities like GDP and inflation are lacking, but this has no direct connection with the stock market bubble, zero savings, credit expansion and worsening trade balance.<< i'm not sure about the trade balance. however, i couldn't disagree more on the stock market bubble, credit expansions and savings implosion. consumer confidence is through the roof based on the "new economy" illusion. people bid up shares to absurd levels that they NEVER would have before b/c the RULES ARE DIFFERENT IN THE NEW ECONOMY. the foundation for the new economy is... increased gdp growth and increased productivity. albeit, statistically manipulated gdp growth and productivity growth. it is a fake new economy. try to lend money in japan or get them to have negative savings. not going to happen. they are not drunk w/ the "new economy." they were, in the late 80s. very drunk. the hangover, they found out, is a b*. so will we. fake numbers will get part of the blame for all this irrational behavior - and rightly so. keep in mind, too, that alan g justifies his exceptionally loose monetary policy on "increased productivity!" the fact it doesn't exist in real dollars doesn't faze him a bit. there is a tight relationship between the fake numbers and the irrationality in the various markets. compounding the problem is the spiral effect. the more the market goes up, the more debt people take on, the less they save, the more the market goes up. these cycles are fun until they are not. then folks jump out of windows.