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To: Les H who wrote (5813)	2/15/2003 10:29:16 AM
From: oldirtybastard	Respond to of 29595

when the intentions and operations of a business strategy are out in the open like that with no competitive advantage, i'd think it's doomed to fail, after all yen paper and $ paper are similarly inedible, global markets will prey on the foolish.

To: Les H who wrote (5813)	2/15/2003 10:52:55 AM
From: Les H	Respond to of 29595

March 1 atimes.com

To: Les H who wrote (5813)	2/15/2003 11:18:35 AM
From: Les H	Read Replies (1) \| Respond to of 29595

Greenspan's gambit and the price of war forexnews.com But Chairman Greenspan’s main achievement was the fudging of economic uncertainties inherent to running large federal budget deficits while cutting taxes – the reality of President Bush’s economic plan as well as its potential Achilles heal. Wall Street is bullish on Greenspan’s gambit because it sees record low interest rates and the President’s spending program as reflationary, while it also conveniently assumes a war with Iraq as the only uncertainty facing the US economy. But the administration’s $690 billion stimulus program and subsequent deficits account for neither a probable war with Iraq nor the subsequent costs of occupation. The risk here is that increased borrowing by the government could eventually burst the bond bubble and drive interest rates higher, thereby crowding out business investment while stock prices languish. This is certainly a possibility, seeing that the Fed’s reflationary attempts have so far only been a boon to the commodity market as more dollars chase real things. Moreover, it is assumed that the stock market has adequately “priced in” a war, implying that equities are now trading at a discount. This is false. Price to earning multiples for the S&P 500 are near historic highs at 29 times actual earnings, double what the index traded in January 1991, when the war began. The difference becomes even more apparent when including the cost of under-funded pension plans and the implicit subsidy in options, which corporations do not expense but can deduct from taxes, thereby boosting reported earnings. Using the S&P’s newly devised “core” earnings, which include these costs, the index is now trading at a lofty 40 times trailing earnings. Not only is the market’s current valuation grossly overoptimistic but sentiment is also at polar extremes when compared between January 1991 and today. Bearish sentiment pervaded the market in 1990, topping out above 55% at three separate times in the run up to war. In contrast, bearish sentiment on stocks is now trading near all time lows in the 20%-30% range according to Investor’s Intelligence. Not coincidentally, the last two times that bearish sentiment traded in this range the market crashed. Those times were June/July 2001 and the November 2001-March 2002 period. These periods followed the most oversold readings seen in a decade and reflect the general optimism that a bottom has formed, irrespective of valuations seen at post-bubble bottoms. Subsequently, the rich valuations combined with a technically overbought status should lead to another large selloff in the coming months. more at link above.