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To: Andrew G. who wrote (59192)	1/18/2001 11:56:20 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 436258

i'm not sure what you mean...credit spreads not coming in tells me that the rate cut did NOTHING to alleviate the credit crunch in the corporate debt market. in fact that strongly supports my argument that the rate cuts are NOT working this time, at least not yet. i also don't see how a bear market bounce in the NAZ invalidates what i'm saying. if you recall, after the April crash, the NAZ rallied over 30% in a week, and then proceeded even somewhat higher over the June-August period. it ignored warnings, collapsing DRAM prices, etc., just as it is doing now. in late August Wollanchuck told me what an idiot i was for expecting a further collapse, and also dismissed my worries about debt. this is not something that can be judged by looking at what happens in a week, or even a few months. in early 1930 (the time when the last debt deflation in the US began), the market rallied for 2 months, and in mid '31 it rallied for three months...all those rallies were given back and in the end it had lost 90% of its peak value upon reaching its final low in mid '32. the previously 'sound' banking system was in complete tatters, as defaults began to reach proportions that had been unimaginable 2 years earlier. i repeat a statistic i cited earlier: over the past 1 1/2 years, $410 billion flowed into mutual funds, an all time record. and yet, prices have gone nowhere. trading volume has also increased enormously over this period, without being able to move prices. my point is, it would take a MASSIVE reflation of the system to get any tangible results. such an effort would create dislocations that i don't even want to guess at. so we'll have to revisit the issue at a later stage - it can as of yet not be determined with certainty whether the re-liquefication effort is doomed or not. i BELIEVE it is, but proof will have to await future developments.