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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (5787)	7/12/2001 5:27:48 AM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hi Maurice, <<The Dow doesn't look expensive to me compared with interest rates; neither does the Nikkei>> Not many things look expensive relative to interest rate these days, even the ridiculously expensive HK apartments (US$ 1,000/sqf) that yields 6.5%. Capital, specifically the capital of savers, are being mistreated to an extent never before during peace time, and this anomoly will be fixed by the market, Greenspan not withstanding. Interest rate flips up (credit risk, inflation, whatever), highly valued cash flows remain constant or trend down, kaboom goes the valuation. The interest cost of savers capital will go up, unless the FED is indeed going to get away stealing without suffering inflation or devaluation or more likely both. <<Not a bargain, but not expensive. Which is really the way it should be. When the Japan government does some money-diluting with a Krugman devaluation, that will push stock prices up>> Japan devaluation from these levels will probably trigger a general round of competitive devaluation across Asia, putting additional burden on the USD, US trade flow, consumer, etc. Devaluation may push up the Japanese exporters, not Japanese stocks in general. If the stocks rise more than the devaluation has taken away, fine. Bad odds. Japanese exporters best time is probably behind them already. Export demand will also go down, and if not, the DOW will go down. <<Since Japan's population is aging and reducing, they should be expected to produce less as oldies retire [and die]>> ... and thus domestic demand for many things having nothing to do with death and dying will trend down, not up. Valuing Japan out of context is dangerous, as it had been for the past 15 years. Borrowing JYen is probably a good idea, if one wants to be burdened with the small volcano risk. The JGBs will blowup, without regard to whether the volcanos do or not; because interest rate can not stay at zero; if it does, Japan will finish itself faster still. Chugs, Jay