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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (46574)	8/7/2003 10:58:39 AM
From: Casaubon	Respond to of 52237

OK, this is a much more constructive form of communication. I will try to address some of your points later. Currently I am catching up on three weeks of work.

To: Haim R. Branisteanu who wrote (46574)	8/7/2003 6:35:06 PM
From: Les H	Respond to of 52237

repeal of Glass-Steagall probably contributed to the telecom/utility dereg IPO and debt bubbles.

To: Haim R. Branisteanu who wrote (46574)	8/7/2003 9:06:11 PM
From: Casaubon	Respond to of 52237

1. Ignored the bubble in the stock market during his testimony in April 2000 ---- the public lost trillions in savings and pension plan. Hiking margin requirement would avoid that AG repeatedly warned that the stock market might be over valued. The only person of any stature which had the balls to speak out. People didn't want to hear it because their bank statements were making them giddy. Nobody forced a single person to participate in the madness. They did so of their own free will out of greed. Your statement implies noone has any personal responsibility. I simply don't agree. No matter how easy it is to borrow money, you are supposed to know how much debt you can handle in a responsible manner. Hiking the margin requirement would have negligible effect because of easy access to leveraged instruments such as call and put options. 2. Y2K flooded the market with money when actual no crisis existed If someone hands you money and says, "here, don't spend this unless there is an emergency" what should you do? He was simply making sure that business activity did not grind to a halt in the event that ATM machines didn't work. I don't understand the big deal, please explain. 3. April 2003 warned about deflation only to reverse itself after admitting that is was a calculation mistake in the CPI (rent equivalent) Ok, if you say so. I believe it is possible such reversals of statements are a result of political pressures. I also believe many people would find that to be two faced (or speaking out of both sides of the mouth, as you put it). I don't believe AG is being duplicitous. I think he has genuinely tried to warn people to be more careful with risky instruments (such as stocks). But, these are just my opinions (ie not based in fact). 4. No clarity in policy and many times confusing or opposing statements from the FED OK, once again this is your opinion. So, I will rebut with my opinion. I think AG clearly vocalized his concern about irrational exuberance in the markets (this was not confusing). However, I do believe the easy credit expansion was the error on the part of the Fed which allowed the bubble to become a danger to the monetary system. I can see where this policy is in stark contrast to the words spoken by AG and the FED. But again, people should be more responsible with borrowed money. Just because the Fed made money available didn't mean people should spend with impunity. All in all, I would say the words AG speaks are fairly clear to me. He keeps repeating that balanced budgets are good for low long term interest rates. And he keeps emphasizing that people and governments should spend within their means. And he has stated that growth in business activity should be the means by which gov't spends more money, not growth in debt supply. If gov't, like any citizen, won't take responsibility for the manner in which it spends, why do you blame AG? Again, I can agree that the low interest rate policy is in conflict with the words of AG but, I can also believe that to be the result of bowing to political pressure. So OK, AG loses points for not having enough strength to stand strong against the onslaught of Uncle Sam. I think the guy is pretty honest. 5. Unemployment rose by close to 2 million for the last 2 years If AG had employed them, you might be able to make some kind of a point but even then I'm not positive. Companies hire and fire as it suits an economical motive. If anything, the Fed has provided companies with the capacity to maintain economically unsound personnel during the lean years (via easy borrowing policy), in the hope that business activity will pick up before even greater numbers must lose their jobs. Your placing blame on AG for those job losses is in conflict with your tenet that AG's monetary policy (ie easy credit) is unsound. You can't have it both ways. AG didn't hire those people but easy credit conditions possibly contributed to them having a job in the first place. Easy credit may even be responsible for some still being employed (even though they are not currently economically viable personnel). So, it's possible those people should not have been hired in the first place. It's even possible that many more might lose thier jobs should the Fed remove the easy credit conditions which it has created. The bottom line is this: there are no guarantees in life. When are you going to learn this??? 6. Not vocal against budget deficits and trade deficits I just outright disagree with this statement. But again, opinions are like assholes...everbody has got one. 7. Generated by his and other FED officials statements the present "Bond Bubble" which lost around 15% in 6 weeks or around $2 to $3 trillion in losses Again, personal responsibility. Don't buy bonds if they are not attractive instruments to you. The Fed is trying to maintain a low interest rate environment which might not be unlike the kid with his finger in the dike. The purpose of this exercise is an attempt to minimize mounting job losses and debt defaults in a weak business environment. I give AG points for actually trying to help people out of tough times via lower credit payments to banks. Enough said.