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To: marginmike who wrote (16051)	10/6/1998 1:46:00 PM
From: Sawtooth	Read Replies (2) \| Respond to of 152472

All: a pulse check. Tuesday October 6, 1:27 pm Eastern Time Japan faces major challenge on economy-Yellen WASHINGTON, Oct 6 (Reuters) - White House economic adviser Janet Yellen said on Tuesday Japan's economy had deteriorated despite some steps taken by Tokyo to boost demand and warned that Japan's recovery was essential for the rest of Asia. ''The administration believes that Japan has a very major challenge on its hands in attempting to stimulate its economy and very strong fiscal measures are really called for,'' Yellen told the National Association of Business Economists. ''Japan has taken some steps, but unfortunately the situation in Japan has deteriorated,'' she added. Yellen said that recovery in Japan, the world's second-largest economy, was ''absolutely essential, the 'sine qua non''' for restoring stability elsewhere in the crisis-hit Asian region. ---

To: marginmike who wrote (16051)	10/6/1998 2:31:00 PM
From: waitwatchwander	Respond to of 152472

The bad news is that Maurice may have missed on the boat with his "Koreans Staying Home Theory". The good news is that Dougjn's "Day of Judgement" may be very close. 22online.com

To: marginmike who wrote (16051)	10/6/1998 2:38:00 PM
From: dougjn	Read Replies (1) \| Respond to of 152472

Doug Im glad you are our resident doom and gloom guy. Hey, SOMEBODY has to pick up the slack when Ramsey goes on one of his (many) vacations. <g> However the market crashed in 1987 and slew's of people were thown out of work. Th auction records at Sothebies kept going higher until 1990. The 87 crash (followed by a quick recovery) made the Street nervous, and slowed down bullishness and bonuses in a lot of areas. Some brokers, mostly, got thrown out of work. The 89 shut down of the junk bond market (attendant to the Drexel collapse, but really caused by hugly widening risk spreads, as now) is what had the really bad Wall Street and NYC effects. It was in late 89. The effects were felt in 90 and 91. Buy the way. The junk bond market has again shut down. (The environment is however quite different in other was. Government rates and inflation were rising then. Now they're both falling.) The fact that your so sure we are going into a depression is a pretty bullish sentiment. I dont know whats going to happen, but I feel a need to play devil's advocate against your Armeggedon scenario's Mine? I think you are referring to the Fed governors' warnings. As well as the current official Japanese government predictions for their economy's much stronger decline next year. (Still not incredibly severe, thank God.) No, I have never said a depression was coming. Though I think we are seeing some pretty impressive people suggesting that it IS conceivable. Basically, if the key government players do everything wrong. I don't think that will happen. I think we'll keep it to, probably, a mild U.S recession here. (With a long depression in a number of Asian countries. While Korea is making strides in its financial sector, I very much doubt their real economy has hit bottom. Other places are of course worse.) We have a lot going for us. We remain in a very strong technology revolution. Which has made computer power far more widely useful and productive than it was a decade ago. Chips and embedded software everywhere. And of course the data communications and internet revolution. I don't think all of that has played out. So in a VERY long perspective, I think we remain in an updraft. From a Kondratief (sp?) wave type perspective, etc. Though it'ts worth noting that the revolution of the 20's that had an awful lot to do with that decade's really incredible prosperity also, really hadn't slowed down of its own accord either. Radios, cars, electricty all available on a mass level, together with mechanised appliances, and the like. That didn't slow down until the 60's. The 30's just created a screeching halt to their pervasive deployment, given the incredible worldwide mismanagement of the crash aftermath. We also now have going for us a much better understanding of how to manage the economy (and the will to do so) that we have in Washington, and leading countries in Europe. This faith would be redeemed if the Republicans in the House would follow the Senate and approve the $18 million for the IMF -- which would cause other countries to do the same. The IMF may need reform. But Newt and his boys aren't going to manage to create something different and effective in the very short term. And the bucks are needed for the likes of Brazil (hopefully not even to be drawn on, but to be there for the markets to see), if we are going to indeed avoid that step closer to Armeggedon. I think the Repubs. will. I sure hope so. It would also be nice if the JAPANESE would inflate their economy. People say they already have done all they can on the monetary front. Their central bank rates are already down to a half percent. That reflects a lack of understanding of how central banks work. The BoJ can inflate the currency by buying Japanese government debt from the banks, with yen checks from the central bank (drawn on thin air, as corresponding Fed checks are.) That in turn would increase the reserves of the banks. Which would allow them to lend new money again. (There are rules that prevent lending that would reduce reserves below certain levels. It's part of how central banks control domestic currencies.) Yes it might cause domestic inflation in Japan. So what? It's what Japan needs. That's who needs liquidity. Tax cuts, as planned, but much more so, would also help there. Unfortunately, I don't think much of that will happen in Japan. Only a little. And so for that and other reasons, I think the range of likely possibilities in this country is very little or flat growth next year, to a middle level recession. (That is WITH the Fed. creating liquidity here at a smart pace.) The Street stock analysts have not yet adjusted their projections for companies large or small to even the top range of that scenario. (Consensus bottom up Street estimates for the S&P 500 still have earnings up a laugable 15%, almost.) Only a bit of adjustment for only a few companies has occurred for next year. To some extent the market has raced out in front of the analysts, and taken prices down ahead of a decline in the projections. But only to some extent, in my judgement. Medium and small caps have indeed been hurt a lot more than mega caps. But they are still not cheap on an historical basis. They are sometimes SAID to be cheap now, but if you listen closely you will discover that that is on a RELATIVE basis. They are cheap compared to the Mega caps. So yes, the Mega's are going to come down more here, probably, than the mid caps. But I think when the market indexes still have quiet a ways to go, no equity issue is really a very safe place to be. When the market has a panic type sell off that takes it notably below 7400 (which believe me will spook traders big), I'll be in there buying. (Qcom will be on the shopping list.) Not because I will be sure that the market won't eventually go lower than that paniced low, before this bear is over. But because I think a good, solid, worthwhile rally at least will follow. Which brings up another point. Most commentators STILL don't call this a bear market. With all this going on in the world, do you really think this down cycle will be over before it is universally admitted we are in a bear market? And before conversation shifts to how much longer it will last? (With the pessimists saying years, and it will get much, much worse.) THAT will be the sort of sentiment that could mark the bottom of this bear. Am I sure of all this? Nope. It's all a game of the percentages, isn't it. <g> Doug