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

To: LLCF who wrote (14589)	2/7/2002 11:24:59 AM
From: Mike M2	Respond to of 74559

DAK, great article on corporate debt latimes.com mike

To: LLCF who wrote (14589)	2/7/2002 11:37:21 AM
From: Ilaine	Read Replies (1) \| Respond to of 74559

First you have to define "speculation."

To: LLCF who wrote (14589)	2/7/2002 4:13:06 PM
From: smolejv@gmx.net	Respond to of 74559

>>is anyone talking about the seemingly counterintuitive rally in gold vs Yen during a depression???<< That Japan AG in its (terminal?) recovery mode (sg), dj

To: LLCF who wrote (14589)	2/7/2002 4:50:36 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 74559

excessive 90's money produced paper-based bubbles widely I don't think that there is any economist of any school that doesn't think excess money printing [through lower rates] doesn't lead to a change in individual indiffernce curves in favor of more borrowing & speculation. I prefer to return to the theory of the pond if the pond is handed much more water, then in time greater supplies of fish render them worth less at least a fish would be worth less per loaf of bread (assuming tilled farmland remained constant) the 90's saw unprecedented growth in money supply the phenomenon was so great that even the majority of central banks sold time-honored gold bullion in favor of USTreasury debt which yielded a return I regard this as almost heretic, and a violation of central bank responsibility in defending a stable currency in the next 2-3 years this trend will likely reverse especially if currency turmoil sets in more than just in Asia the excess of paper money led to rising worth in all things paper-based: - stocks (naz bubble, tech stocks trading at >100 PE, penny stocks from internet worth billions, etc) - bonds (delayed move of longbond yield down under 5%) - property (abundance of cheap money from low-rate mortgages) - debt (who didnt raise billions in issuances?) - even govt auctions of wireless spectrum an argument could be made that two bubbles remain in the USdollar and US property central banks have decided to eschew bullion in favor of a promissory note by the United States govt the result is a bubble in the dollar that is doing mighty damage to US exporting companies, tech and nontech alike the dollar bubble is linked closely to the USTBond bubble with Fed money available at 1.5%, it is hard to argue that money is not free now this sustains the bond bubble, and thus real estate the dollar bubble is maintained by a required $2 billion per day to finance the US trade deficit this cannot sustain itself now the next few quarters will see the bubble release a slow leak as capital burns and the Fed reflates with fresh money the big question in my mind is: titanic deflation forces are burning capital titanic reflation Fed forces are infusing capital how long before the Fed wins? what aberration will appear temporarily as a cost of victory? my guess on timing is another 8-12 months time at least Al Qaeda gauranteed that, as Q4 was anything but typical aberrant vehicles like gold are being jumped upon within the nations with the most severe capital burning e.g. Japan and Asia the longer it takes for the Federal Reserve to prevail, the worse and uglier the aberration will become and an aberration is an absolute certainty in my little mind my biggest concern now is the correcion in the dollar, with its associated link to bond yields, might lead to sudden dislocations in our consumer spending from reduced value of real estate US homeowners raped their home equity in the 90's I am amazed the US and Europe have held up so well during this assault on capital if not for zero rate car sales in Q4, and heavy govt spending in Q4, we would be knee deep in recession instead, we delayed its most serious bite to come / JW

To: LLCF who wrote (14589)	2/7/2002 6:38:58 PM
From: Maurice Winn	Read Replies (2) \| Respond to of 74559

DAK, of course doubling the number of currency units, like splitting a stock in two, halves their values. After the currency or share split, it of course takes a lot more of them to buy the same thing that one used to buy. But the world is made up of a vast array of variables. Another characteristic of people is to want single variable causes. So they say that Uncle Al printing more money during the 1990s caused a bubble in the stock market. Given the growth in the world's economy and the increasing use of the US$ as a means of exchange and store of value [unwise in my view, but that's another story], there was good reason to increase the money supply. Namely, to prevent extreme deflation as a constant supply of money chased a rapidly increasing supply of goods and services as 6 billion people increasing became part of the modern world's globalized economy. I explained in an earlier post how the dot.com bubble formed without any control by Uncle Al. If people get it into their stupid heads that they are all going to be rich if they buy gold, then a bubble will form and the price of gold will zoom to $1000 an ounce. But then, as the $1000 buyer looks for a greater fool at $1001, they might be bitterly disappointed to find that they are holding a piece of metal which is so stupid it can't even react with anything else to form something better. It just is! It's just the madness of the mob. Uncle Al can't do anything about it, other than rant about irrational exuberance, point out the risks of madness, raise interest rates to try to prevent huge borrowings to buy a share in the madness, cross his fingers and hope that the mob doesn't take it too far. So, the single variable of money-printing can cause prices to rise if the rate of printing exceeds the economic growth rate and so on. But that is nowhere near enough to explain the dot.com, tech/bio and telecosmic bubbles and associated Dow general enthusiasm about a booming economy. We need another variable [which is where those who got nervous about algebra at school and went into the arts start to get bamboozled] to explain the dot.com bubble. Money printing is NOT the answer. It was a minor variable. As a puzzle for readers, they could try to work out why on earth, if not Uncle Al's money printing, the share price of dot.coms went up a long way. A clue is to check out the serotonin reuptake inhibitor levels in those who bought dot.com shares after 1997. Another clue is to ask them a simple question such as "If two typists can type two pages in two minutes, how many typists will it take to type 18 pages in six minutes?" when they are hooked up to one of those brain-scan gadgets which show areas of brain lighting up. Those who bought the dot.coms will have lengthy and brain-wide lighting up of their brains compared with people who bought other shares. I hasten to add for the anecdotally instead of statistically inclined that there will be a range with even some very low illumination people being sucked in too. Multiple variables DAK, NOT Uncle Al's money printing... Mq