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.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Perspective who wrote (207611)	12/3/2002 12:46:16 AM
From: Lucretius	Read Replies (1) \| Respond to of 436258

funny how that happens isn't it? -g- buy some calls -g-

To: Perspective who wrote (207611)	12/3/2002 1:02:37 AM
From: ild	Read Replies (1) \| Respond to of 436258

Fed is scared. They cut 50 points. They know that if X-mas is bad - it's finish and they won't reflate. About $100 Bil is somewhere in refi cash out pipeline, but refi process has slowed a lot, so the Fed is helping to fill the void.

To: Perspective who wrote (207611)	12/3/2002 1:19:36 AM
From: UnBelievable	Respond to of 436258

Subject: Economics 101 Normally I would not post other peoples stuff, particularly two days in a row but it is kind of nice to know that if in fact your are crazy at least at least you are not alone. The first piece is a letter that Richard Russell received and that he included in his market commentary today. The second excerpt is from Hahn. I am beginning to think that Hahn's ability to see the cloud in every silver lining is even greater than my own but his comments about the Fed and the money supply explosion are pretty good. Among other things he points out that the spike in the money supply in the last week reported, an annualized 59%, is only second to what occurred in the week after the WTC. I have included an excerpt of his comments below as well. These are both pay sites but I think they are both worth the price of admission. Russell's is particularly good -clearly showing that it is possible to be pretty sharp even if you are old <gg> From Richard Russell's dowtheoryletters.com Dear Richard, As a freshman in college, I took the required course of Econ 101. I liked it for the first day when we learned of the law of supply and demand and the resultant curve. After that I became bored silly by the teaching of "Whispering" Smith and his equally silly red, blue and green pencil requirement which I was constantly violating by my youthful forgetfulness. My definition of Economics soon became, "Common sense, made difficult." It is now fifty years later and I have spent my entire life in finance, (after majoring in English literature) and everything that I have observed and learned in that rather long and intense career has convinced me my original assessment was absolutely correct. I might add it is about the only assessment from college days that has survived the test of time and experience. So what about it? To put it in the simplest and truest terms, the ONLY thing the Fed, our political leaders, Wall Street, and the vast majority of economists in this country believe to be the basis for all economic thought and policy is to increase public and private debt and create more fiat money. That's it. Nothing else. Not a lot of imagination. Five thousand years of economic history, social commentary in the writings of the greatest minds that ever lived, and just plain common sense dictates that this is a recipe for disaster, has never worked, and is against every principle of honesty, integrity, discipline, prudence, good judgement, foresight, and wisdom. Richard, it's over. The future we ignored and trashed for the benefit of the present over the past half century has now arrived. If we survive the next decade or two or three with our precious and beloved freedoms intact, and that is a huge IF, we can consider ourselves indeed fortunate. My only defense for me and my family against the folly of these fools is to own gold coins and gold stocks. AND to vote in every future election against the "reigning" President and my federal representatives in Washington. Dan M. From Richard Hahn hahnscorner.com Greenspan's New Bubble The most recent Greenspan panic began on October 10th. The stock market came very close to a meltdown on that day, as it dipped beneath the July low. The market protectors quickly stepped in and used concentrated buying of stock index futures to drive the market back up and away from the breakdown zone. A flood of new money was created and was used to slap down the bond market. The flow of money out of bonds propelled the stock market rally for the balance of October. The Federal Reserve followed up with a very aggressive interest rate cut on November 6th. The market didn't react well to an irrational interest rate cut, so the Federal Reserve rapidly accelerated the growth in the money supply (see M3 chart below), a rising tide which floated all ships. That brings us to the beginning of December. It's no surprise to see a stock mania in full swing. That's the unhealthy outcome of market manipulation. It's unnatural and not sustainable. Therefore, time favors the patient bears, even if momentum favors the wild-eyed bulls. What should you do with this information? The problem with investing in expensive stocks is your gains will depend on scoundrels continuing the Ponzi scheme. Considering the near term geopolitical risk, it's not worth exposing your capital to the latest version of the “greater fool theory”. Let others become the current batch of bagholders. This has happened at least four times since the market top in March of 2000. This bear market rally may be the last one before we drop to a tradable low. How quickly that happens depends on events in the world during the next ten days. The most recent M3 chart has data up through November 18, 2002. You can see the recent parabolic advance in the money supply. The spike in the growth rate is second only to the post 9/11 spike. The most recent week's growth increased at an annualized 59% growth rate. That's an explosion of money creation. This is an emergency, panic reaction by a very desperate Federal Reserve. In an attempt to avoid the same fate as the Japanese economy in the 1990's, Greenspan is applying all of his remaining monetary policy tools now. Short term asset inflation is likely. In the long term, the destructive aftermath of the bursting of the enormous stock market bubble will overwhelm Greenspan's irresponsible actions.