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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (21785)	10/29/2004 8:19:49 PM
From: Tim Bagwell	Respond to of 42834

Kirk, good observations. He said he could raise margin requirements but then the speculators would get a home equity line of credit or cash advances on credit cards to get the funds to invest. And many of them did this too. So I think you're right that Greenspan had a sense that the bubble would not have been affected by margin equity thresholds. I think the bubble would probably have happened regardless of simplistic controls like margin requirements. As you point out, the bubble was a result of unrealistic growth expectations which were brought on, in large part, by the Internet event which created an illusion of new opportunities that would never materialize. Jumping on the craze were many ill-prepared CEO's like the Bernie Ebber ilk who used the mirage of valuation as a way to fund all sorts of risky corporate behavior. Once the mirage vanished these corporations were doomed to fade away. It's natural selection at work in the market. Of all the speculation that took place, margin was, most certainly, a very small part of the total.