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

To: Mike M2 who wrote (27795)	4/29/1998 11:03:00 PM
From: kahunabear	Read Replies (1) \| Respond to of 132070

I hope you folks will do me a favor and visit my new SI thread: Mutual funds that can short - Subject 20606 Thanks, WS

To: Mike M2 who wrote (27795)	4/30/1998 8:50:00 AM
From: MythMan	Read Replies (3) \| Respond to of 132070

Mike, you need to read this. We need someone on these threads to counter your constant babble of doom and assorted links to apocolypse stories <g> April 29, 1998 The Economic Bubble Theory The Dow's flight above the 9,000 mark and sudden 165-point retreat this week has triggered warnings of a "bubble economy" -- the ominous notion that markets have been swelled by speculative excess and the first pinprick in investor confidence will explode them. The repeated reference has been to Japan, whose stock and real estate markets soared to dizzying heights, only to crash and drag its economy down to a crawl for most of the 1990's. But America today is nothing like Japan eight years ago. Japan's banks were awash with corporate stock and debt secured by bloated real estate prices. Inept regulatory, monetary and fiscal policies strangled its economy. The American economy today is nearly a mirror opposite. Its vital signs, with one possible exception, are healthy. Unemployment is at record-low levels. Inflation, properly measured, is near zero. Private debt and real estate markets are stable. Banks hold substantial reserves. None of this means that the economy cannot slip into recession. But a recession that might start now would reflect the ordinary ups and downs of a complex economy, and not the inevitable implosion following speculative excess. The one possible exception to the ceaselessly good economic news is steadily rising stock prices. A 9,000-point Dow may or may not prove sustainable, and the Dow may or may not fall 20, 200 or 2,000 more points. A 2,000-point drop could prove traumatic for investors and cause many to cut back purchases. But even a drop this large would bring stock prices down to levels that were deemed high as recently as a year ago. When stocks plummeted by the equivalent amount in 1987, the Fed kept the economy growing. Cassandras point to tight labor markets as another trouble spot for the economy. But Mickey Levy, the chief economist at Nationsbanc Montgomery Securities, points out that low unemployment no longer poses a serious inflation threat. Even if wage rates start rising, the Fed's tight lid on monetary policy can prevent businesses from passing them along in higher prices. Pollsters point out that employers are fearful that if they raise prices they will lose sales. Workers are fearful that if they ask for higher wages they will lose work. The only fearless ones appear to be the economists, who, try as they might, cannot seem to find a bubble worth worrying about.