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

To: TobagoJack who wrote (11148)	11/18/2001 6:46:24 PM
From: Ilaine	Read Replies (3) \| Respond to of 74559

>>The underlying thesis of the unwinding of a bubble economy does not require the additional event of WTC 911.<< Hi Jay - Some observations of 911's aftermath - we never actually get to see history repeat itself. There are always perturbations which act sort of like what I call the intersection between the Heisenberg Uncertainty Principle and Schroedinger's Cat - as Herodotus put it, "No man can enter the same river twice, because the second time it is not the same river and he is not the same man." Or, as Niels Bohr said about quantum mechanics, "If you think you understand it, that only shows you don't know the first thing about it." Same thing is true of history. It's useful to study history because enough people believe that history repeats itself and/or in historical justifications for present and future acts that you get a great deal of insight in predicting mass behavior, but only if you study it well. Who could have predicted Putin and Bush with their arms around each other's shoulders? Well, actually, I did predict earlier that Russia would be better off in a Western alliance. Who could have predicted gold at only $275 despite global turmoil? Well, actually, I predicted that gold would not be a great investment because catastrophe was not going to materialize. Who could have predicted that the stock market would be back to pre-911 levels? Well, actually I predicted that gearing up for war and various stimuli would keep the economy, and the market from cratering. Who could have predicted cheap oil, cheap gas, and cheap natural gas? Well, actually I, like many others, said at the beginning of the year that supply would increase and demand would decrease until they came into equilibrium - I thought that would happen in 2002 but things seem to happen faster now with better communication. As for the housing market - mortgage rates just reversed their month's long trend down, and swung up sharply in the last week. Which suggests there may be a sharp surge in demand. At any rate, for now interest rates have bottomed out and started back up. Gasoline prices are up, too, which also suggests a sharp surge in demand. OTOH, Saudi Arabia is threatening the Russians that they will lower prices low enough that the Russians find it unprofitable to sell oil. We'll see. Both events seem coincident in time with the fall of Kabul. Pearly Button reported from England last week that walking in the countryside near his house, which had been banned due to foot and mouth disease, was now allowed again. There don't seem to be any more anthrax letters. Al Qaeda appears to be getting their directions on how to make nuclear weapons from "The Journal of Irreproduceable Results," a joke site. On the plus side, no one worries about shark attacks anymore. I am cautiously optimistic. The US economy, like the world economy, is huge. One bad event in one sector isn't enough to derail it.

To: TobagoJack who wrote (11148)	11/19/2001 9:59:08 AM
From: MeDroogies	Read Replies (2) \| Respond to of 74559

You make alot of mentions of the New Ec, but neither I, nor many people, really believed in the whole concept. The few that did are now badly battered and licking their wounds. It is for that reason I remain optimistic. Bubbles burst constantly, with most smaller than this one, but usually with the same result...recession, stagnation, recovery. The size of the initial bubble is less important than the reaction afterward. As for 9/11 being a stand alone event, it certainly was. It is unlikely to have occurred in any other country but the US due to our previously lax internal flight security. As for machines being "weaponized"...well, that's a consistent theme of the arms race. It is also something that is constantly dealt with. And finally, as for the "theme" of terrorism on a larger scale...I'll wait and see. I still believe this was pure luck on their part, was only 25% successful (based on other thwarted hijackings and the fact that they chose their targets poorly), and that this "network" will perform other acts that are less "eventful". Little known to US citizens (but known to most Israelis and anyone like myself who has spent time there) is the sheer inadequacy of terrrorism as a real tool of terror. Most bombers blow themselves up while inflicting little damage, and certainly not as much as they'd hoped if they are even moderately successful. History has shown that most terror organizations, even when highly structured, are manned by poorly educated, poorly led, and poorly informed foot soldiers. The previously thwarted plots in LAX and the Phillipines are examples of this. Even so, the occasional "big one" slips through (Munich, Brighton, Tel Aviv). Terror is also an arms race, but one the terrorists usually lose. Unravelling of an economy as a theme is something we have disagreed on, and will continue to disagree on. As another noted, interest rates rose in the past week. This is primarily due to refinancings (such as my own), rather than new purchases. The question is - will the refinancings improve people's positions, will the extra money be used productively, and will some of it be saved? I vote that all will occur. Interest rates will rise through the new year, then fall again as we settle into the winter doldrums.