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To: Les H who wrote (147087)	1/30/2002 12:36:35 AM
From: Skeeter Bug	Read Replies (1) \| Respond to of 436258

>>Dow 40,000 by 2008<< pesos?

To: Les H who wrote (147087)	1/30/2002 12:41:16 AM
From: LLCF	Read Replies (1) \| Respond to of 436258

Dent misses the whole point... ie. the boomers are VERY important [any marketer/ demographer will tell you that]... but he ASSUMES they'll just plough into the DOW like nuts. The real point is 'go with the flow'... whatever becomes the thing to do, they'll do it to excess. If it sell stocks then look out... if it's buy gold.... get on board. DAK

To: Les H who wrote (147087)	1/30/2002 9:10:01 AM
From: Les H	Read Replies (2) \| Respond to of 436258

Living on Hope and the Greenspan Put Over the last year, Mr. Greenspan has practiced Jerry Garcia’s dictum that too much of everything is not enough: slash short rates until stocks go up. He’d deny that, of course, arguing that his Herculean 475 basis points of easing — a 73% cut from a 6 1/2% Fed funds starting point – was not about stoking stocks, but stoking the economy. He’d concede, perhaps, that he was trying to boost investors’ risk appetites – Keynes’ animal spirits! – as a means to stoking the economy. But he’d demur that he has been underwriting the downside for stocks. To wit, he’d deny that he has been putting a Greenspan Put beneath the equity market. And his denial would indeed have the ring of “plausible deniability,” a favorite term of the Richard Nixon White House, Greenspan’s original political patron. But as a substantive matter, Greenspan has indeed been socializing the downside risk of the stock market, encouraging risk seekers to privatize the upside potential of stocks. Nothing wrong with this, I stress, at least in my opinion (though perhaps not in the opinion of some of my PIMCO colleagues!). And who is paying the premium for the Greenspan Put? Holders of cash and near-cash: investors in money market funds, short-term bond funds, bank CDs, et al. Cash has indeed been turned into trash as an investment, with real short-term interest rates at zero. Cash has been returned to its original purpose as a store of wealth, not a generator of wealth. Since cash carries no price risk at all (the one unforgivable sin for a money market fund manager is to “break the buck”), logic implies that cash should not generate a real rate of return, but rather pay an interest rate that preserves cash’s real purchasing power (similar to the case under the Bretton Woods framework, when $35 of cash bought one ounce of gold, which does not pay interest). The Greenspan Put beneath stocks is, in the end, “funded” by holders of cash. And to me, that is the way it should be. Capitalism is about individuals taking self-interested investment decisions that, as if by an invisible hand, benefit society. Capitalism is also inherently given to boom and bust, as the illusion of liquidity created by organized securities markets generates waves of irrational exuberance followed by waves of irrational pessimism. The democratic process (Congressional law!) grants the Fed monopoly control over cash creation. Thus, it is entirely legitimate for the Fed to redistribute income between the lenders and borrowers of cash, when Adam Smith’s invisible hand generates capricious outcomes for society as a whole. more at investavenue.com