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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Mark Adams who wrote (4819)	10/8/2001 10:03:01 PM
From: Hawkmoon	Respond to of 33421

The bulk of corporate income is not publicly traded stocks as we might assume on the face of it, but privately held business. Good point Mark... But I still have to believe that deflationary and competitive forces in the marketplace will prevent these companies from squirreling the money away... The company that doesn't use those tax cuts to chops the prices on their goods, or boost their profit markgins, will soon be out of business as they lose market share to those who do. I really don't know what's the right decision. My heart tells to give it to the people who earned it and need it, but I also understand the Keynsian concept of "Animal Spirits", which we've seen manifested in Japan over the past several years. But I also realize that giving the money to corporations, who would likely take it and create additional wealth, might be the lesser of two (or more) evils. The other alternative is a physical infrastructure program that probably is long overdue, in order to keep people working. All I know is before panic and despair sets in, we're going to need something to boost consumer confidence to at least stabilize the current situation. And I don't believe $60 billion is going to cut it. Hawk

To: Mark Adams who wrote (4819)	10/9/2001 10:37:33 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Mark, you make a very excellent point. I think we've seen that the lags on so many of these tax type information flows are long enough that no one can know in real time the actual composition of tax receipt inflows from the different sectors of the economy. Also there are tremendous lag times in trying to determine how savings rates are being impacted by the private, govt. and corporate sectors. We have an excellent example on a somewhat parallel track of the uncertainty of how much stimulus to the parts of the economy, the very large percentage decline in Central Bank Interest rates, is creating. We have the obvious counterbalancing aspect of an economy which has had excessive capital investment, particularly in certain sectors (Telco, technology) and due to the high debt levels. These companies can not take advantage of lower funding costs that the banks can, and also they just have excess capacity that needs to disappear. That's a Darwinian, contracting process and there is not an effective way to change that. More importantly, Classical Economics states that you don't want to allievate the suffering and downsizing in sectors where there is too much capacity, and capital has been "squandered" by creating much more supply than demand. At times we need to remember to be respectful for the processes in which our capitalist system works and not expect it all to be easy. I think it's very much like being appreciative and respectful of God and the World he's created. We see old age and Death, and we realize it's part of the God's Grand Design. We should have respect for that and not think that we are above the grand Design, to do so would be Hubris. And the Greeks were famous for saying that Hubris (exaggerated pride or self confidence) is the fall of Man. If I could bear witness to anything, it's that I don't understand the process completely, by any means. But I'm in Awe of it, and I respect the many sublime attributes of it and our larger universe.. John ---- the Hubris quote from Tom Wallace of Bankers Trust......