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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Hope Praytochange who wrote (518246)	1/1/2004 6:36:20 PM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 769670

Bounce hasn't fooled bears By Robin Bromby 02jan04 NASDAQ up 50 per cent over 2003, the Dow up 25 per cent, US Internet stocks up 79 per cent - even Japan's Nikkei improved more than 20 per cent. Sounds great, but the bears aren't buying the story. They're just as grumpy as ever, churlish to a fault. To them, the day of reckoning is still nigh. The big bounce of 2003 is just another delay on the inevitable path to the big bust. The fact that all the bears' dire predictions of the past few years - the total collapse of the US dollar, another 1929 apocalypse, that gold will be the only thing to hold as paper money everywhere becomes worthless - have yet to be realised but this daunts them not. Even high-profile US economist Paul Krugman is worried, and titled his column on Tuesday The So-Called Boom. The recovery in the US economy and the retail blitz at Christmas were good for high-end store Neiman Marcus but not so great down at the Wal-Mart end, he wrote. Krugman doesn't buy the improved labour market statistics, and reports that workers have not seen higher wages from their increased productivity. For most Americans, economic growth was a form of reality TV - that is, something that happened to other people. Over at TheStreet.com, one of those online services which blossomed during the tech extravaganza, they are just plain panicking. Their prediction: 2004 will be the year when the Fed's Folly comes due. They say the US Federal Reserve, the central bank, will manage to stave off the crack-up until after the presidential election in November, but after that - watch out! "The coming deluge will usher in a period of global economic malaise and dire losses in financial markets," says senior columnist Peter Eavis. It's the debt levels, stupid, he is saying - and the trade and fiscal deficits caused by Americans spending beyond their means. "America has no easy way out of the trap the Fed has built for this country. No nation has splurged quite like this one without having ultimately to pay the piper." In more measured, but no less menacing, tones Morgan Stanley chief economist Stephen Roach concludes that the odds are shortening on a hard landing in 2004. The world economy remained in disequilibrium. In the US, the debt levels, current account and federal budget deficits were all at historical extremes. High wage developed economies were all experiencing jobless recoveries. The US was not the only one to blame: Europe and Japan were wealthy players that had dragged their feet on economic reform. Meanwhile, fingers were being pointed at China over the trade problems of the wealthy nations. "The result is a unique confluence of tensions that have left the global economy in a state of heightened instability," writes Roach. "The venting of those tensions could well be the main event of world financial markets in 2004." One popular bear website, www.dailyreckoning.com, took little comfort from the boom of 2003. The folks there just scratched their heads, wondering why, when George Soros was getting out of the US dollar, all the patriots were backing it; why, when Warren Buffett said he could find no stocks worth buying, the punters stepped up and bought Amazon.com. And they dipped their lids to the Fed and its low interest rates for keeping the music playing in 2003. "The bubble was successfully reloaded. Investors can now buy stocks for more than they are worth - and ruin themselves by borrowing for less than the real cost of money. "When it will all come to an end, we don't know. But that it will come to an end we have no doubt. Nothing lasts forever - least of all a debt bubble."