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

To: geewiz who wrote (29928)	7/17/1998 11:32:00 AM
From: Knighty Tin	Respond to of 132070

Art, I think Rubin finally figured out that more devaluations mean two things: 1. Foreign countries sell more of our bonds, and we desperately need them to buy our worthless paper. 2. The trade deficit grows even wider, and it is already huge. Both factors could eventually lead to widespread inflation and higher rates in this country. The answer is that foreign govt's have to raise their rates to attract capital, and we have to lower ours, to stem the tide. However, due to tremendous asset inflation, we can no longer lower rates without almost guaranteeing a depression in this country. Earnings already suck wind, so raising rates is also a no-no, at least according to the mainstream economists. So, our do nothing Fed will continue to do nothing but print money until the great northwest runs out of trees, at which time the entire house of cards comes tumbling down. The real worry is that somehow, the European Babel Dollar, becomes competition as a reserve currency. If Europe continues to grow faster than the US, I think this is a certainty. In a couple of years, we will probably wonder how anyone could have considered the deficit, trade and budget, riddled dollar a safe haven. MB

To: geewiz who wrote (29928)	7/20/1998 11:51:00 AM
From: Mike M2	Read Replies (2) \| Respond to of 132070

Art, at this point any action simply delays the inevitable collapse. The central bankers have been every effective at keeping the confidence game going so calling the top has been a mugs game but I do expect the end result to be one of the worst bear mkts in history on a global scale. Many participants in this orgy see such comments as foolish but the bust is caused by the excesses created during the boom. A few of the excesses are excess manufacturing capacity and debt in Asia. The few observers who warned of the excesses in SEA or Japan may have seemed foolish to some but see what has happened. In the US we excess consumption, debt, record trade deficits, record stk mkt valuations, record low savings rate, low productivity. The forecasts of doom and gloom may seem absurd to those who do not study history but they are the ones who are doomed to repeat it. the biggest booms in history have always been followed by a big bust. I have yet to hear an argument that can convince me that it is different this time. FA Hayek said the road to poverty is lined with paper wealth. Mike