To: Ilaine who wrote (38835 ) 12/10/1998 11:12:00 AM From: Mike M2 Read Replies (2) | Respond to
CB, the fact that certain industries are not participating in the bubble is not unique. In the 20's the U.S. agricultural sector did not share in the "new era" wealth, in fact, they were suffering . Keep in mind the agricultural sector was a larger proportion of the US economy back then -I think 50% of the population lived on farms. There are many parallels to the 20's then like now the US economy was the last to turn down. The Dutch East Indies was hurting in 1927. Europe turned down in 1928. If there is no trouble in the middle east ( a big if) oil should remain depressed due to an acceleration of the global economic slowdown that Will's econometric model forecasts -g- . Most oil producers want revenue regardless of the price per bbl. This is true with many countries dependant on commodities whether they are raw materials or manufactured goods from countries like Korea. Steel has not participated because like most manufactured commodity items there is excess supply and the world economy continues to weaken. The same could be said for chemicals and autos etc. I don't recall who said it but in every "new era" aka bubble there is an open ended fantasy in the 20's it was autos, radio, and electricity. Now it is high tech and the internet. New technology or ideas captures the imagination of the public whether it is trade with the new world -Mississippi scheme or south Sea bubble, canals, railroads, autos,radio, electricity, high tech. Some of the characteristics of a bubble are extreme overvaluation, public participation, belief that the good times will last, the central banks can avoid recession or depression with monetary policy- easy money and easy credit. The Austrian economists believe this is nonsense- a point that I will address in another note. With respect to the Wall St touts and industry experts I am sure some really believe we have a new pair of dimes, some are ignorant of history, some believe the monetarists that printing money can avoid recession/depression, IMO some just want to keep the party going and care little about the inevitable collapse. i will add more at a later date -too much going on right now. i can assure you that the bulls will get a severe dose of da bear's tough love. ho ho ho Mike
