Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (9750)	12/1/2001 9:38:24 AM
From: s berg	Read Replies (1) \| Respond to of 99280

Bubble Fed giving us distribution for x-mas I am in the secular bear camp too. One of the lessons from Japan is that the steps needed to fight deflation are politically difficult. Bubbles need to be deflated like we successfully did earlier with our banking crisis. Economic policy now should be directed towards making it easier for weak companies to fold with the least amount of pain to employees (job retraining, longer unemployment insurance). I agree with earlier posts that it is healthy that we are allowing Enron to fold. The Fed is fighting the last battle, i.e. using the tools that work in inflationary recessions, monetary stimulation. By doing so be4 and early in the recession they have, 1. Propped up high tech businesses with liquidity thereby postponing their demise. 2. Stimulated the automobile sector, a twofer further inflating the consumer bubble and stimulating a sector of the economy where there is a worldwide capacity glut, automobiles. Again, in the long term some automobile companies will need to fail / merge out of existence in order to bring capacity down to demand 3. Stimulated the real estate bubble which we know from history will soon contract 4. Stimulated the dollar bubble which we know from history will soon contract. 5. Reinflated the stock market giving us "distribution for x-mas". This is clearly a sector of the economy with massive misallocation. Many mutual funds and hedge funds need to fold to restore economic health. Instead the Fed has increased the chances of another watershed stock decline / crash. Was not nasdaq sufficient. Injecting liquidity before a deflationary recession is akin to buying stocks at the end of a secular bull. My guess is that Greenspan and company do not have the feel for cycles that is crucial for successful investing. Earlier this cycle they poured gasoline on the nasdaq fire injecting massive liquidity to counteract Y2K. The Reagan administration gold standard advocates argue that over all long term economic cycles to date the Fed has failed. While I am grateful for the Fed's earlier success fighting short term inflationary recession cycles, in terms of the long term cycle and the Fed, it does not appear to be different this time. LTK007 said, i am in the Secular Bear Camp until proven otherwise---my only comments i can throw out at this moment(time factor at work:);is this,we are trying to fight our way out of the looming threat of a longterm recession just as the european sector and asian sectors are signaling a worsening slowdown(the triple whammy threat).