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Good point Kent but I feel the causative factor was more the nearly
unlimited ability to raise more money that allowed the scam to take hold
and investors to be duped. Today, he wouldn't be able to raise
enough money to start Worldcom, let alone buy out MCI and all the rest of
the fairy tale.
Bob
At 03:42 PM 8/19/2002 -0400, you wrote:
>Does anyone think
Ebbers could pull of his magic show again today?
I do. We have laws against murder and yet murders
still occur. The bubble encouraged people to take chances because
they thought they had better margins for error or they thought they could
manage their way out of it. It didn't help that the SEC was
understaffed, but that wasn't the causative factor.
Kent
----- Original Message -----
From: BobsKC
To:
realtraders@xxxxxxxxxxxxxxx
Sent: Monday, August 19, 2002 2:17 PM
Subject: RE: [RT] GEN: DEFLATION AND GOLD....
We have not had a depression for 70+ years but now.. now that we are coming off the bubble and the insane values that bubble placed on equities, we are headed for another depression???? Isn't it possible that equity prices and PE ratios are simply returning to historic values and common sense pricing? We still have growth .. small but real.. would you rather have that or the pretend growth of the bubble?
A lot of worthless companies are still folding their tents. Were it not for the bubble, they wouldn't have had a tent to fold. (Does anyone think Ebbers could pull of his magic show again today?) Crooks are still being exposed. Crooks made possible by the bubble. This is a cleansing process and it is a good thing. It is not the end of America. The Chinese are not taking over. American industry is not doomed and there is not going to be any depression. The market does not have to roar up or down you know? I it possible for it to sit in a long term, tight trading range while the touch up is completed in the process of burst bubble clean up.
I can make a valid argument that aliens will land in the next year and the likely hood of that is at least as great as another depression.
Bob
At 01:27 PM 8/19/2002 -0400, you wrote:
DEPRESSION and DEFLATION not EXACTLY the same......
yes, in a depression, real assets worth nothing, and the US dollar worth little, so gold shines....can't be printed, can't be forged.....
BUT With a slower evolving deflationary scenario, all assets groups decline......pricing power is gone.
This is why everyone is watching the housing market so carefully.....
as once THAT market begins to decline, then we are really in trouble and a depression becomes likely since mortgage holders (banks, etc) begin to foreclose on properties whose value is less than the principal on the mortgage due.
Once that ball gets rolling, the government has no choice except to pull an "Argentina" and massively reflate.....if they can do so in time.
If they can't, wham, depression occurs....
if they do catch it in time, then massive inflation results with mortgage holders and other creditors, the big losers.
-----Original Message-----
From: Charles Meyer [mailto:chaze@xxxxxxxx]
Sent: Monday, August 19, 2002 11:39 AM
To: REAL TRADERS
Subject: [RT] GEN: DEFLATION AND GOLD....
Group-
Excerpt below from interview which references price of HM during the great depression. I wanted to know Pretcher's logic for expecting the opposite in the event of a deflation this time around.
chas
==========================================================
TAYLOR: Well, I have had some experience in analyzing gold shares in all sorts of markets. Homestake Mining shared with me their daily share prices dating all the way back to 1888 through 1998. During the depression, Homestake Shares appreciated very greatly despite the fact that we experienced deflation rather than inflation.
BATRA: Did the price of Homestake rise right from the beginning or...
TAYLOR: No, actually Homestake's share price initially fell too from $83.50 just before the crash to $65 about two weeks after the crash. So perhaps the law of substitution did initially apply. But from November 15th and thereafter, Homestake's shares rose dramatically, to a high of over $500 by 1936. And during 1932, when the DJIA had lost 90%, Homestake's shares had reached $162. So investors who diversified their portfolios with a little Homestake were able to travel through the Great Depression relatively unscathed, while those who owned only the Dow Jones Industrials, were devastated.
BATRA: Ok, what I am saying is that timing is important. Gold stocks are also going to do very well. However, at this stage, my advice is to start preparing yourself by buying gold bullion. Then begin buying gold shares the moment there is a whiff of inflation or when the market begins to favor them.
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