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Strategies & Market Trends : The Stock Market Bubble -- Ignore unavailable to you. Want to Upgrade?

To: bobby beara who wrote (955)	8/4/1998 5:52:00 AM
From: Real Man	Respond to of 3339

The Japanese are savers and net exporters. We are spenders and have a huge increasing trade deficit. The Fed has been printing lots of dollars (as the world reserve currency which replaced gold) and selling them in exchange for goods and services for a long time. The dollars wind up in the mattresses in Eastern Europe (which experienced hyper-inflation in the 80-s and 90-s - Yugoslavian dinar added 15 zeroes, the Russian ruble added 3 zeroes) and more recently in SEA. Deflationary scenario assumes this process will continue. I'm not so sure about it, although the analysis of Ed Yardeni seems convincing. His thoughts are that the interest rates in the US and Western Europe will approach Japanese. But Greenspan somehow sees more threat from inflation, and Warren B. sold his zeroes.

To: bobby beara who wrote (955)	8/4/1998 10:13:00 AM
From: Les H	Read Replies (2) \| Respond to of 3339

Japan's interest rates have no basis with respect to inflation. The government rigged the rates low to act as subsidies to troubled banks. The banks used the money to invest in the U.S. and in SE Asia during the emerging markets bubble. This got them in still further trouble. As for U.S. being as overvalued as Japan in 1989, I recall that Nikkei's P/E at the time was in mid to high 50's. More unease would set in the U.S. markets when and if the Dow/S&P break 8500/1750. Many technicians would look for the culmination of a double top in a quick decline that would take it down at least the height of the tops.