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Strategies & Market Trends : The Thread II -- Ignore unavailable to you. Want to Upgrade?

To: SirRealist who wrote (2636)	6/25/2001 6:36:59 AM
From: Mao II	Respond to of 9026

Sir: I believe we will have to experience a crisis in the banking sector in order for your scenario to play out. At this stage, that appears unlikely. The bubble in capital spending, particularly in the telcom area, has not had a significant impact on the broader financial system so far. Some of the nonbank financial companies -- GE Financial comes to mind -- are somewhat at risk. But money center banks, regionals, and most finance companies are not. There has also been an absence of intense real estate speculation -- another historical component of bubbles -- which indicates that the housing and commercial real-estate markets will not experience the kind of catastrophic downdraft necessary to induce the general economic environment necessary for massive decline. Housing is still more important than fiber. Without the broad reduction in wealth triggered by a collapse of real estate, plus a collapse in banking and finance, I think the depths you've suggested are, at this point, highly speculative, to put it mildly. That said, your numbers and scenario are interesting and bear (there's that word again!) watching -- particularly if we begin to see more problems in the banking sector and capital markets. Thanks, M2