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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (99470)	7/20/2003 5:47:15 PM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 132070

Tommaso, I heard one fellow conjecture the run up in the "junk" stocks on the NAZ was hedge funds going after the stocks with large short positions. This makes sense to me. Once they got the shorts started covering the momentum players kept the party going and spread to the rest of the market. Martin Wiess points out that deflation is a gradual process. We saw lower prices in commodities, then came semi conductors, now we have lower prices in products we import from lower cost producers in Asia. We have started to see durable goods deflate. He thinks the rest will follow one by one. If we start to get the correction in housing costs and commercial real estate this could be the next asset to deflate. The bond players seem to be starting this ball rolling if they keep on selling off the longer end of the yield curve. You mentioned medical costs, private education and vet bills. As soon as people have less discretionary capital, IMO the service sector businesses will see less income and start fighting for business by cutting prices and costs. We could start washing our own laundry instead of each others. <g> Right now it looks like Greenspan's printing presses are inflating bond, stock assets, housing assets and some service sector items. Cheap energy is the backbone of the US quality of life. I notice old Greenspan is trying to orchestrate a world price for Natural Gas instead of local pricing. I wonder what our trading partners think of this idea. <g> Washington and the Fed will be trying everything they can think of to fix the problem. Of course they will do things that make it worse in the long run. What scares me is they will come after our capital and assets to try and solve their problems as Governments get ugly when they are in trouble. Who knows what happens next, I think all we can do is sit back and watch. Our job is to keep one step ahead of these characters and preserve our capital and assets. I recently added to my BEARX position, and will add when it looks like this bear market rally is rolling over.