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To: Ilaine who wrote (167)	4/2/2001 8:51:38 AM
From: Don Lloyd	Respond to of 443

CB - Don, the more I read the more convinced I am that the 1929 crash did not "cause" the Great Depression. One factoid I am mulling over is that even at the lows of 1929 after the crash, many of the big blue chip stocks were still trading at split adjusted multiples of their 1923 price. You probably saw that table that Cramer constructed comparing the prices of the Nasdaq 100 compared to - I think it was 1998 - and if you adjust for the splits they are still significantly ahead. Even if the price of your stock has gone down by two thirds from its high if you are holding three shares you're even. Anyway, someone constructed a similar table in 1929-1930 - it's clearly a case of those that bought at the blowoff top getting whacked but those who bought before the top coming out fine, at least until the bottom fell out in 1930.... I suspect you're right. As you pointed out earlier, although I don't remember if you agreed with the conclusion, every stock transaction simply transfers the purchase price from one investor/trader to another. Money is not destroyed. OTOH, the so-called wealth effect is real and backed by the Austrian Subjective Theory of Value. As stocks rise they partially replace the desire to hold cash to the degree that they are perceived to be liquid. This is an equivalent effect to to an increase in the money supply and a reduction in the purchasing power of money at the margin. As stocks fall, this is reversed and the effective money supply contracts and increasing amounts of increasingly valuable cash are held by individuals, slowing down business to some degree. Regards, Don

To: Ilaine who wrote (167)	4/2/2001 2:09:16 PM
From: Thomas M.	Respond to of 443

Stagnant isn't bad when there's a decent standard of living. Stagnant is bad if it lasts 50 years, though. The question is, what happens when the U.S. bubble bursts, and Japan can no longer sponge off our economy? Tom

To: Ilaine who wrote (167)	4/4/2001 12:21:21 AM
From: JF Quinnelly	Respond to of 443

The Japanese suffered a dual crash in 1990, their stock market and their real estate market. Both had built incredible bubbles. At one point the Royal Palace in Tokyo was worth more than the entire State of California. There's a fellow on the radio here in LA who knows Japan quite well. He thinks one important thing that is happening is their refusal to write down bad loans in their banking system. They need to do something for their banks like we did for our S&Ls. They refuse to admit they have the bad loans, their banks are virtually bankrupt as a result, and their economy just limps along. 10 years and counting.