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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Chip McVickar who wrote (72168)	6/23/2001 7:43:10 AM
From: Rarebird	Read Replies (5) \| Respond to of 116791

Chip, there's still really no visible sign of when the economy is going to improve. The semiconductor equipment book to bill numbers announced Thursday was another disaster. You think this is the bottom? That is the question the desperate Bulls ask? Are new orders right around the corner? There is absolutely no reason to suspect that the answer is yes. I'm hearing a lot of Bullish chatter lately that the U.S. economy is starting to firm, but I don't see any evidence that that is the case. The economy is going from $150 a bottle of champagne to a $50 bottle..., and hard cider is a long way off. Try telling that to someone who bought CSCO in the 80's or even in the 40's over the past year. Household debt equals 14% over a families ability to repay, but this has been going on since the gold standard was droped and the world began living on borrowed money. To be sure, it is the U.S. economy that is the center of the European and Asian economies. At the center of the U.S. economy stands the consumer, who has no savings and who is feasting on debt. An 18 year Bull Market where equity prices soared parabolically was able to compensate for household debt. At of the end of the first quarter of 2001 inside the U.S., there was a total stock of debt amounting to $US 27.5 TRILLION. The Financial sector (banks, mortgage lenders, etc.) has signed up for $US 8.4 TRILLION of it. Guess who has signed up for the other 19+ Trillion? This mountain of debt is being held up by an economy with an annual output of $US 10.2 TRILLION - as measured on a U.S. GDP basis. U.S. private debt now stands at 147% of U.S. GDP. U.S. consumer installment debt stands at a record 21.7% of disposable income. The real economic problem is that the American public cannot handle an economic contraction or recession. Nor can they handle, a drastic fall in the stock market. That fact changes the economic problem into a financial problem. It is the major banks and it is other lenders, who have lent to the public all the money they now owe. That IS the financial problem. If the public were to start to go broke in significant numbers in an economic downturn, that event could crash the entire financial system. So, Chip, you think the Fed will be able to fix the U.S. economy and specifically, the stock market, with its next rate cut? I expect the Fed to continue to cut interest rates to the bone WITHOUT reviving the U.S. economy. That is the inevitable end result of this whole process. Just like Japan: it won't work this time ! We have all watched Japan pay for this exact form of economic folly for more than a decade. But still the American Public, with the help of "Big Brother" and the Media, cling to the idea that it can't happen here. Not only can it happen here - IT IS HAPPENING HERE. Hardly anyone wants to recognize it, of course, because very few know how to think for themselves and analyze. When will Gold sustain a rally? When the facade finally cracks. It could happen at any time. Perhaps after the next Fed Rate Cut? But eventually the Dollar will get hit very hard. That's all Gold needs here.