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

To: Wayners who wrote (71599)	3/9/2001 8:10:49 PM
From: marginmike	Read Replies (1) \| Respond to of 99985

so what your saying is that we didnt just have a huge asset Bubble? The inventory overhang has been caused because the ASSET BUBBLE POPPED. In light of your research the fed cutting wont work. Unless you believe that what happened wasnt an asset bubble?

To: Wayners who wrote (71599)	3/9/2001 11:35:30 PM
From: Doug	Read Replies (1) \| Respond to of 99985

W.V.S: This is not a meltdown of the economy. It is a profit recession in the TECH sector due to excessive Capitalisation beyond sustainable demand.Manipulating short term interest rates is not going to solve such problems which are systemic. The solution is reduction of capacity thru mergers, reengineering and Chapter 10.

To: Wayners who wrote (71599)	3/10/2001 1:49:56 AM
From: bumboo	Read Replies (1) \| Respond to of 99985

I think we ARE in the midst of a classic asset deflation scenario. The excess liquidity pumped into the system over the past few years had caused the economy (and the stock market) to lose touch with reality. That connection with reality is now slowly being re-established. To add to the collective discomfort, we have a massive credit bubble, a huge trade deficit, and a falling currency. The current economic downturn has also caused an inventory problem, but that, like you say, would normally be resolved by stimulating consumption. Unfortunately, the other problems that I mention could very likely be the dominant factors that prevent the quick recovery that we are all expecting. And if are to face a deflationary environment and an unwinding of the debt bubble, the fed can cut rates all they want and it won't do any good (as evidenced in Japan and SE Asia). On the other hand, even if what you are saying turns out to be the reality (i.e., the market tends to be up 18 months after the second cut), there is a lot water that needs to flow under the bridge between now and then. The NASDAQ could easily fall another few hundred points from here and make it all back up before your 18 months are up. In short, I am saying that there is still a greater risk of losing capital on the downside than of missing profits on the upside.