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

To: Raymond Duray who wrote (20693)	7/2/2002 3:12:55 PM
From: smolejv@gmx.net	Read Replies (2) \| Respond to of 74559

U.S. ECONOMIC WRECKAGE EXPOSED The financial markets are typically considered leading indicators of the economy, and with good reason. They form an important transmission mechanism through which monetary policy impacts the economy. Typically, at the dawn of a new economic cycle, rising stock and bond prices allow companies to replenish cash holdings and strengthen balance sheets. Yet this time it is different. Despite a flood of money and credit creation, and despite widespread predictions of recovery, the markets refuse to cooperate. Why? In short, because we are not experiencing a cyclical recession, and therefore a cyclical recovery is not on the way. Instead, the U.S. economy is sick to the bone. Unprecedented excesses in consumption and financial speculation have devastated the growth fundamentals of the U.S. economy, as evidenced by the deplorable state of savings, capital investment and profits. Worse, the gross macro- and microeconomic mismanagement that caused the current economic sickness was sold to the public as a new paradigm economy that would deliver unprecedented miracles of productivity growth and profits. Yet it only delivered unprecedented fraud and abuse in various forms — from manipulated government statistics to rigged corporate profit reports. Yet deception and mismanagement have apparently lost their power to sustain the illusion of economic health. Loose monetary policy is having no impact, major corporations have been caught committing egregious fraud and no amount of government massaging of the numbers can patch up widespread deteriorating profits. The markets are not rallying... the recovery is not under way. Instead, the bear market and a major recession are only just beginning. (from Richebächer letter 07.02) ...the Criminal court has now the same symbolic load as the Kyoto accord or the land mines agreement. USA is not anymore planning to straighten out the international dependencies - it wants to get out of any dependences. Washington reduces systematically its commitments to the rest of the world, because it sees them as a nuisance. The Bush government wants options instead, no commitments, it looks for ad-hoc alliances, and not for partners. The unilateral way of thinking, which wants to see the state act only from the position of strength and independence, got its day. Many would wonder over the really important consequences of 09/11. For the modern world and the western understanding of values it's the America's mistrust and over-estimation. Both consequences are exceedingly dangerous, because they make the world less predictable. A decision against the Bosnia mandate for instance would shatter the whole region. America wouldhave to pay dearly for it, because it would destroy the system, that used to legitimize its own power and authority. (from SZ 2.July.02) 2c from DJ: in dire straights, it's good to have friends RegZ dj