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To: chic_hearne who wrote (35146)	4/1/2001 6:56:11 PM
From: Poet	Respond to of 35685

Wierd, I was just going to PM you with this, from Hahn's Weekend Update. It dovetails your concerns nicely: “Wars are caused by undefended wealth.” - Douglas MacArthur, New York Daily News, November 18, 1945. The stock market in the United States has just endured a severe correction. Most of the pain was experienced in Nasdaq. The declines in the DJIA and the broader market away from tech have been minor relative to the carnage in the aggressive growth areas. So far, no one has shown panic, although the level of market awareness is rising as major news publications broadcast the early stages of breakdown. Normally, the markets should rally from this point with confidence. The problem is nothing is normal when we're in a post mania environment complicated by a bout of stagflation. Even that confluence of events could be seen as creating a buying opportunity, if we could see over the horizon. The short term potential for an external shock comes from the real possibility of financial collapse of some Japanese banks and/or insurance companies. You can imagine the effect in the United States if, for example, JPM/Chase or Metropolitan Life were to announce insolvency tomorrow morning. That degree of catastrophe may happen with some Japanese institutions in the near term. The domino effect is potentially very large. I would simply point to the recent parabolic rise in the dollar, the still high levels of the volatility indices and the failure of the equity indices to rally much above the collapse zone as evidence of something unpleasant just over the horizon. The Japanese intend to do no harm to the rest of the industrialized world, but the harm may occur anyway. With Japan near the end of its bear market and the United States just past the top of its bull market, events could unfold that may result in a reversal of fortunes. For a few months, the potential exists for a subtle and unintentional Pearl Harbor redux. Even though the Nikkei retreated, it held near the 13000 level. The Japanese fiscal year is now complete. Over the next few days or weeks, we may learn the impact of mark-to-market accounting rules.