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Maybe not, but we are back again to the 1929 scenario with banks in the
stock market with insurance companies in brokerage and banking and brokerage
firms in banking. Everyone, even the corner grocer is into credit card
issuance. Even dead people are getting pre approved credit with a $25,000
limit. It all started with tulip bulbs and then computers and aerospace,
now it is internet, telecom, optics and the giga chip. Years ago the drop
in P&G would have been a one point drop in the Dow, yesterday it was 100+.
With every split volatility gets worse.
People have hocked everything to get into this market and nobody seems to
think that a drop can be prolonged. Many of todays real swingers weren't
even born when things happened in the seventies. It is just a one way
market for them. We shall see Armageddon. When I don't know. I just do
what the charts tell me.
Any more depressing news and I may hang it up for the week. Ira.
Earl Adamy wrote:
> The oil field is far from the only place in which consolidation has been
> going on to regain pricing power! It's been happening in virtually every
> industry under the watchful eye of a Democratic administration. I
> remember about 30 years when many of the same economic ingredients were
> in place: booming stock market, frothy IPO market in computer stocks,
> booming housing market, rising interest rates, and rising oil prices.
> Volker started raising rates in early 72 and it took 10 years to wring
> the inflation out of the economy. I am not suggesting that we'll see an
> exact repeat, but the seeds have already been sown. I also note the
> corporate bond market has not seen the rate retracements seen in
> treasuries.
>
> Finally, I do not believe that the trend in oil prices will be instantly
> reversed by production speak from this administration and OPEC. It takes
> a long time for alternate fuels and discretionary usage to make an
> impact and it will be years before all those gas guzzling SUV's and
> sport trucks are rusting in some junk yard; not to mention increased
> demand from recovering economies around the world.
>
> Earl
>
> ----- Original Message -----
> From: "Timothy Morge" <tmorge@xxxxxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Cc: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Wednesday, March 08, 2000 12:23 PM
> Subject: [RT] Re: Alan Greenscam, Public ENEMY Number ONE
>
> Bill:
>
> Let me add just one small item here. Everyone is talking about OPEC
> again Now, I am a proponent of
> free market economics, so don't mis-read this. But at the turn of the
> last century, the large US
> oil companies were broken up into an entity called the 'Seven Sisters.'
> For most of the 20th
> century, the oil companies fragmented further and further into less
> coherent and non cooperating
> firms. Late in the 1990's, some very shrewd CEOs used the plummeting
> price of oil to do the best
> sort of inventory control possible: They turned from oil exploration to
> oil field inventory
> consolidation. While most of the world is busy reading articles about
> OPEC, there are very few
> stories written about the piecing together of these once mighty oil
> companies. The Seven Sisters
> have basically been reunited and are certainly in control of oil
> inventories that are much larger
> than the state controlled oil fields of OPEC. These firms ate each other
> up after driving down the
> price of crude and now, after emerging as a few large multinationals,
> are more than willing to
> allow the price of oil to rise. And if OPEC gets the blame...why should
> they complain?
>
> Best,
>
> Tim Morge
>
> Bill Bancroft wrote:
>
> > Norman,
> >
> > One amendment to your theory---Al Gore is the executor of his father’s
> estate, which holds
> > nearly $500,000 worth of Occidental Petroleum stock. So it would seem
> OPEC can't lose (ABC
> > news ran a story on this two days ago).
> >
> > OPEC does not want to hurt the world economy with excessively high oil
> prices, but at the same
> > time, OPEC does not want oil prices to crash back down to $10-----OPEC
> wants its own version of
> > a "soft landing".
> >
> > nwinski wrote:
> >
> > > The dilemma I see is that this huge spike in oil prices is
> threatening the
> > > world economy. $30 + for
> > > oil is inflationary and the price of just about everything will be
> going up in
> > > the next few months. Given the outlook for both inflation and
> recession, which
> > > dragon should Greenspan fight? Should he raise interest rates to
> fight
> > > inflation and possibly exacerbate any possible recession? Or does he
> do
> > > nothing and risk letting inflation get out of hand? That is a
> dilemma that is
> > > a very real possibility and no one is talking about it.
> > >
> > > Now, let's think about why OPEC would want to jack up oil price
> to the
> > > point it could cause a recession or economic slowdown in an election
> year?
> > > They have been aware that the high oil price could be a problem for
> the world
> > > economy for several weeks, but have done nothing but pay minor lip
> service.
> > > Could it have anything to do with a Texas (read Oil friendly)
> governor is
> > > running for President and a nice little recession could help plant a
> Bush in
> > > the White House? I wonder?
> > >
> > > Cheers,
> > >
> > > Norman
> > >
> > > P.S. Gore says he invented the internet and Bush is Gov. of Texas
> and was in
> > > the oil biz. This Gore vs. Bush race seem to me like an interesting
> metaphor
> > > for our society and economy as the "new ecomomy i.e. internet"
> battles the old
> > > economy i.e. Oil do battle for supremecy.
> > >
> > > Daniel Goncharoff wrote:
> > >
> > > > It is important to understand the problem faced by Greenspan.
> > > >
> > > > The market goes up in an 'irrationally exuberant' way. He says he
> will
> > > > take away the punch bowl as soon as he sees signs of the party
> getting
> > > > out of hand, ie, when he sees inflation rise.
> > > >
> > > > The economy keeps growing at a healthy pace. But inflation doesn't
> rise.
> > > > Instead, the increase in wealth from the stock market is
> reinvested, not
> > > > spent.
> > > >
> > > > This leaves Greenspan with a dilemma. Does he raise interest rates
> > > > anyway, risking stifling the economy and creating a deflationary
> > > > environment? Or does he wait for signs of the stock market bubble
> > > > translating into artificially higher asset prices?
> > > >
> > > > Obviously, he has done the latter. But inflation is not there. The
> > > > wealth effect is much smaller than economists would have expected.
> > > >
> > > > The FT recently had an article saying that spending patterns of
> > > > individuals reflect a 75% expectation of a serious market
> downturn.
> > > >
> > > > Perhaps it would have been better to assume that raising interest
> rates
> > > > would not have an important economic impact. Perhaps not...
> > > >
> > > > Regards
> > > > DanG
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