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Good to see that Greenspan and the other bubblemeisters followed thru and
reassured me of their reckless disregard for the welfare of the US citizens.
They did make a few gamblers in Washington and NYC happy though (for now
anyway.)
Just because the market is at extremes and folks (including myself)
recognize it, should not reassure you that it will continue. Folks like
myself who take a hell of a lot of time to research and try to understand
the nature of the beast, have spent equally as much time in careful entry
and stops when short-selling this bubble. Back in 1929, there were more
than there share of people who warned of the bubble. The difference
between 1929 and today is, things are MUCH, MUCH WORSE.
Specifically:
Comparing the 1980-90s to the 1920s
Evidence that the US is now a declining power rather than a rising power,
and hints that the next depression will be much worse than the Great
Depression of the 1930s.
1. In the twenties, the US was the world's leading creditor. In 1998, the
US is the world's largest debtor.
2. The fed govt. had a budget surplus each year from 1920 through 1930.
>From 1980 through present, the US has ran massive deficits. The national
debt was reduced by more than 33 percent during the 20s.
It increased by 342 percent during the eighties alone !
In the twenties, the debt was mostly of long maturity. In the eighties, the
average maturity of the marketable debt was just six years, and most of it
was in short-term instruments that had to be rolled over frequently.
3. In the 20s, the US was on the gold standard. The US had the lion's share
of the world's gold reserves. Currently, the dollar is a pure fiat
currency, and American monetary reserves have dwindled to less than 9
percent of the world total, down from 50 percent in 1952.
4. In the 20s, the US govt. had almost no unfunded liabilities outside of
meager veterans' benefits and pensions. Today, unfunded liabilities,
off-budget borrowing, loan and deposit guarantees, govt. pensions, and
unfunded Social Security obligations amount to approx 14 TRILLION DOLLARS
(that figure was
from 1992! -- it is much higher today)
5. In the 20s, the US ran a significant trade surplus, today, it runs
thelargest deficit of any trading nation in the history of the world.
6. The 20s were a decade of high savings and high gross domestic investment
in the American economy. The last decade has seen RECORD low savings and
low investment.
7. In 1929, the unemployment rate in the US was 3.2 percent. Present day
the unemployment rate is 4.6%. During the Great Depression, the
unemployment rate was recorded as 18% (was questioned to be much higher at
25%). At just this rate (18% x 270 Million), that means an unemployed work
force of
approximately 50 MILLION PEOPLE. I believe this figure will actually be
much higher.
8. Only 51 percent of the American population lived in communities of more
than twenty-five hundred persons in 1920. Almost 22% of the work force was
on the farm. By 1980, the US was overwhelmingly urban, and only 2.6% of the
workforce was employed in agriculture. There is therefore far fewer people
who are likely to be self sufficient in food.
9. Govt. spent just 3.2% of the GNP in 1929. Less than 10% of the civilian
work force was employed by govts at all levels. The only nonemployees
receiving checks from the Fed govt were military pensioners and a few
retirees. Total federal payments were just $700 million. There was no
Social Security. There was no dole for the unemployed. There was no aid to
families with dependant children nor were ther food stamps. Total public
welfare expenditures in the US in 1927, a recession year, were just $151
million in a population of 121.9 million. In the 80s, by contrast, the govt
employed 21.2% of the workforce, and many millions were dependent on govt
transfer programs. In 1989, these totaled
$539.5 BILLION.
10. In the 20s, total fed, state, and local tax collections equaled only
13% pf personal income. By 1989, tax collections had swollen to 36.8% of
personal income. This figure is higher for most Americans today.
11. In spite of Prohibition, the US was largely a law-abiding nation in the
20s. Today, there is an unprecedented wave of crime. Bottom line, The US
position is much worse today than it was in 1929 despite the great growth
of the economy. Spending was modest. Taxes were low. The powder was dry.
The political authorities had room to maneuver because they promised
little. The public in 1929 had a greater capacity to withstand an economic
shock than the public today. People were less dependant, more family
oriented, and more used to taking care of themselves. The federal govt.
entered the 90s
spending 600 million a day out of an empty pocket. Its credit was in hock.
Outstanding promises and contingent obligations are vast, and trillions of
them could be conceivably triggered almost simultaneously by depression
conditions. The trouble with this philosophy of finance, unfortunately, is
that it is an
invitation to total ruin.
-----
Regarding the "paying attention to earnings" comment, you may be one of the
few who actually is paying attention to the fundamentals. If that is the
case, you surely have already sold your stocks. Earnings are punk at best.
I won't go into the horrible earnings history, miniscule dividend ratios,
and massive corporate debt in this e-mail. I'll share that with you in
another one.
Bearish, and mad as hell that we have incompetants running this country
into the ground.
-----------
At 12:07 PM 10/5/99 -0500, BobsKC wrote:
>Ahhh.... The wall of worry! We climb it while screaming armagedden over
>and over and over and still, we do it. In fact, we *must* do it or bull
>markets would fail. The mails to this list proclaiming bubbles, (aka bull
>markets), are about to burst, only substantiate that the climb up the wall
>is continuing. Should nearly everyone on this list begin to proclaim we
>are past the problems, that the bubble was really a hot air balloon to
>prosperity and that the indices have only begun to rise.... *get out*.
>
>Oh, I too am not so sure we won't see an increase of 1/4 pt today with a
>neutral bias. Almost as good as no increase since everyone will then be
>convinced the series has ended. Without an increase, worrywarts will just
>begin to worry about Nov. For me, I would like to see the final 1/4 point
>taken back and a return to focusing on earnings.
>
>Bob
>
>At 05:20 PM 10/5/99 +0100, Gwenael Gautier wrote:
>>Ouch that hurts... Well I hope this is not to happen. Problem with bubbles
>is
>>that they are recognized as obvious bubbles only after the fact. There are
>many
>>situations that are comparable to bubbles but which never burst so they
>are not
>>recognized as bubbles.It was said before 1987 we are in a bubble, and we
>had a
>>crash and the bull we had after just dwarfed the previous, so where is the
>true
>>bubble?
>>
>>still bubbling,
>>
>>Gwenn
>>
>>
>>
>>| -----Ursprungliche Nachricht-----
>>| Von: Earl Adamy [SMTP:eadamy@xxxxxxxxxx]
>>| Gesendet am: Tuesday, October 05, 1999 1:32 PM
>>| An: RealTraders Discussion Group
>>| Betreff: Re: FOMC meeting?
>>|
>>| AG is responsible for guiding the monetary and interest rate policies of
>the
>>| US and this includes managing and preventing excessive speculation and
>>| consumption whether it be in banking, real estate, credit, or stock
>markets.
>>| Allowing bubbles to build and then explode wrecks the economy for
everyone,
>>| not just the irresponsible speculators - clearly an area where government
>>| has a responsibility to act. Early in his career, AG wrote some papers on
>>| the crash of 29 which criticized the central bankers for allowing
excessive
>>| speculation and credit to grow unabated. Just a few years ago, AG had it
>>| right when he spoke of "irrational exuberance", however he was
unwilling to
>>| pay the (probably very substantial) political price of raising interest
and
>>| margin rates to head off the bubble. Nor have our central bankers and
>>| politicians been willing to bring an end to the import of endless cheap
>>| goods which have held inflation in check and spurred consumption while
>>| exporting a major portion of the US manufacturing base and building an
>>| incredible trade deficit. Consequently, by most historical measures, US
>>| equity and credit markets have bubbled to the point where a prick of the
>>| bubble poses a serious threat to not only the US economy, but the world
>>| economy as well.
>>|
>>| When the bubble does burst, as it inevitably will, the retirement savings
>>| and pension plans of at least two generations will be placed in jeopardy.
>>| Not only are these generations at risk of losing their financial
>>| independence, but government tax coffers shorn of the stock market tax
>>| bonanza will be incapable of providing a safety net. Further, US workers
>>| will wake up to find that few are in a position to support the huge US
>>| service economy and that there are few manufacturing jobs remaining. In
>>| short, what happened in Japan in 1989 won't begin to compare to what will
>>| happen in the US when the bubble bursts.
>>|
>>| Earl
>>|
>>| ----- Original Message -----
>>| From: Gwenael Gautier <ggautier@xxxxxxxxxxx>
>>| To: 'James Taylor' <jptaylor@xxxxxxxxxxxxxxx>; RealTraders Discussion
Group
>>| <realtraders@xxxxxxxxxxxx>
>>| Sent: Tuesday, October 05, 1999 2:05 AM
>>| Subject: AW: FOMC meeting?
>>|
>>|
>>| > People make their own decisions and choices. Whether Mr G. was right or
>>| wrong
>>| > to make the decisions he made remains to be seen in hindsight, but it is
>>| people
>>| > who acted on their own buying these stocks, working for these companies
>>| that
>>| > lay off, did not start their own companies, did not buy the stocks,
>>| speculated
>>| > short term instead of holding long term, or bought houses and cars
>instead
>>| of
>>| > stocks, or the reverse, borrowed instead of saved. How can you say G. is
>>| > responsible for what people do. As you mentionned most are irrational,
>and
>>| do
>>| > irrational things and then complain about unexpected results... Well,
you
>>| bet!
>>| > That shouldn't be a surprise, but I don't see what G. is doing in there.
>>| >
>>| > Gwenn
>>| >
>>| >
>>| >
>>| > | -----Ursprungliche Nachricht-----
>>| > | Von: James Taylor [SMTP:jptaylor@xxxxxxxxxxxxxxx]
>>| > | Gesendet am: Tuesday, October 05, 1999 4:06 AM
>>| > | An: RAY RAFFURTY; fritz@xxxxxxxx; RealTraders Discussion Group
>>| > | Betreff: Re: FOMC meeting?
>>| > |
>>| > | If the scum-sucker Greenspan has any spine at all, he will raise
>>| tomorrow,
>>| > | and catch the gambling public flat-footed. This 'man' (and I use the
>>| term
>>| > | loosely) will be hated by tens of millions of American's when this
>ponzi
>>| > | scheme finally ends. A heck of a lot of innocent, hard-working
>citizens
>>| > | will be hurt by his past bubble cultivation. When the blind-sided
>>| public
>>| > | end up unemployed, their families put on the street, and hungry, this
>>| joker
>>| > | will think long and hard about the choices he made. I wouldn't
want to
>>| be
>>| > | him. Rednecks don't act rationally when they are hungry and cold.
>>| > |
>>| > | Signed,
>>| > | an informed student of economics and government mismanagement and
>>| deception
>>| > |
>>| > | -------------
>>| > |
>>| > | At 09:42 PM 10/4/99 -0400, RAY RAFFURTY wrote:
>>| > | >Hi Gary,
>>| > | >
>>| > | >Actually, to get a jump on the Fed. meeting tune into CNBC at about
>>| 8:00 AM
>>| > | >EST for Mr. Greenspan's briefcase indicator. It has been correct
>>| something
>>| > | >like 18 out of the last 19 times. {;-)
>>| > | >
>>| > | > Good luck and good
>trading,
>>| > | >
>>| > | > Ray Raffurty
>>| > | >
>>| > | >
>>| > | >----- Original Message -----
>>| > | >From: Gary Fritz <fritz@xxxxxxxx>
>>| > | >To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxx>
>>| > | >Sent: Monday, October 04, 1999 4:34 PM
>>| > | >Subject: FOMC meeting?
>>| > | >
>>| > | >
>>| > | >> I'm holding a long position into tomorrow and I figured I'd
check...
>>| > | >>
>>| > | >> The FOMC meeting starts tommorrow morning at 0900 ET. But there is
>>| > | >> usually not any impact from the *start* of the meeting, right? Any
>>| > | >> fireworks, if any are to happen, shouldn't launch until they
>announce
>>| > | >> on Thursday at 1400 ET?
>>| > | >>
>>| > | >> The market doesn't seem to think Mr. G. will drop any bombs on
>>| > | >> Thursday, given the run-up since Friday afternoon. Anybody want to
>>| > | >> hazard any predictions?
>>| > | >>
>>| > | >> Thanks,
>>| > | >> Gary
>>| > | >>
>>| > | >>
>>| > | >>
>>| > | >
>>| > | >
>>| > | >
>>|
>>
>
>
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