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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: mt_mike who wrote (4267)	8/9/2002 1:01:45 PM
From: Jim Willie CB	Read Replies (2) \| Respond to of 89467

the other big question in my mind is... clearly a shifting bubble is at work first stocks then bonds and real estate I suspect the exit from bonds will be next, pushed by a resumption in the dollar decline then the cratering of real estate, as rates and joblessness rise so where will the FINAL DESTINATION of NYC elite money be? it fleeced the public on the tech bubble, in full view it fleeced the nation with gold carry trade, in secrecy my guess: GOLD they may be taking leadership from Bank for Intl Settlements which holds a staggering amount of gold they will separate their personal holdings from corroding corporate assets in time the banks might be in far more serious trouble than we know but they know it the masses (even among intelligensia) are largely ignorant of the unwinding of the Strong Dollar issue they probably maintain a view that it will benefit US exporters but fail to follow thru with capital markets consequences they dont see a Real Estate bubble probably because they are right within its midst (or mist) this bubble game will end badly but where will the major money eventually go? ABROAD is not a satisfactory answer it might go abroad, but in what form? EuroBonds? maybe cash? doubtful, since these guys dont collect cash GOLD? most likely thoughts welcome I have been pondering this big question for days / jim

To: mt_mike who wrote (4267)	8/9/2002 1:56:48 PM
From: Jim Willie CB	Read Replies (1) \| Respond to of 89467

comments from Jim Grant, of Grant's Interest Rate Observer "Corporate America, though it has supposedly sworn off make-believe, continues to imagine that it is better at investing than, say, Warren Buffett," writes Jim Grant. "Twenty-five of the 30 companies in the Dow Jones Industrial Average sponsor defined benefit pension plans, and the 25 therefore disclose their assumed long-term rates of return on invested pension assets. What they expected for 2001 was an average return of 9.4%. What they achieved was an average of minus 7%." - Obviously, they're losing money again in 2002. Eventually, however, a poorly performing pension fund will force a company to lower its return assumptions (which lowers earnings) AND kick in more cash to the plan. - "General Motors provides a sobering case study in the deterioration of corporate actuarial positions," Grant continues. "On the company's July 18 conference call, CFO John Devine disclosed that GM's pension fund had recorded a minus 3% return through midyear. Bullishly assuming a flat return for the full year and a 10% annual return from 2003 through 2007 (from his lips, etc.), Devine said that GM would, nonetheless, need to inject $6 billion into the fund over the five years. Assuming an 8% annual return from 2003 through 2007, the company would have to add $9 billion. - Therefore, unless the stock market bounces back dramatically, pension plans will start weighing on corporate earnings and cash flow.