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I'm just a lowly trader who is not an economist
or a CNBC talking head and am therefore grossly under-qualified to either give
advice on economic/fiscal policy or criticize/praise the current economic
team.
But what I do know is that the current
administration inherited a post-bubble economy and a post-bubble bear market
(the NDX was 45% off its all-time high when Bush took office). Toss in 911
and even someone as under-qualified as myself can see that their timing could
have been better....like inheriting a recovery and the early stages of the PC
revolution in the early 90's.
I hear a lot of bashing of these folks but I hear
nothing from the critics on what we should be doing - except raising taxes and
increasing government spending/entitlements. Even the infamous Lord Rubin,
who bravely fled to Singapore once the Enron news came out, has offered
only these solutions. But if history is to be our guide then that
type of policy is exactly what we shouldn't adapt.
What I'd like to hear from the critics are
some concrete ideas on what should be done as opposed to the daily/hourly
criticisms and negative sound bites. And those ideas should include a plan
on how to get any new policy changes through the Congress (particularly the
Senate).
I look forward to being educated.
Bob
<BLOCKQUOTE
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
M.
Simms
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Tuesday, August 20, 2002 10:27
PM
Subject: RE: [RT] GEN: DEFLATION AND
GOLD....
In the
inflationary depression scenario, it would be the best and only
medicine....;
however, in the
second, it could be a disaster if done over a short period of time (1-3
years), since the largest growth industry right now is the US government...
and <FONT color=#0000ff
size=2>attempts to cut-back staff would only lead to more unemployment and a
lower tax base.
Once the big
government train is rolling, it's gotta be first slowed-down, so that private
industry can respond properly, and that will take a long period of time (3-6
years).
<FONT color=#0000ff
size=2>
Funny, on CNBC
tonite, they had a quote from the editor of Fortune who is calling Bush's
economic advisors the Keystone Kops !!!
Unquestionably,
near the anniversary of 9-11, the economic future of the country hangs "in the
balance".....recent articles suggest that NYC's economy is STILL in shambles
with many bankrupt vendors and small businesses, etc. Some financial firms who
lost 20-50% of their staff, STILL HAVEN'T REHIRED replacements !!!
The Fed's
decision on Sept 24th looms large and should be a HUGE
event....
watch how the
stock market anticipates their action over the next 4
weeks....
As always, buy
the rumor, sell the news.
<FONT color=#0000ff
size=2>
<BLOCKQUOTE
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<FONT face=Tahoma
size=2>-----Original Message-----From: Charles Meyer
[mailto:chaze@xxxxxxxx]Sent: Tuesday, August 20, 2002 7:38
PMTo: realtraders@xxxxxxxxxxxxxxxSubject: Re: [RT]
GEN: DEFLATION AND GOLD....
Simms-
Yes; I'm back with another
question.<g> OK; now let me please ask this.
Would
the cure for EITHER scenerio (inflationary
depression or deflationary depression)
be to dramatically cut both taxes and
spending? Or; would the cure be different for
each potential scenerio? I can't see ANY
of these politicians taking steps to do either. Tks for your
patience.
chas
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
M.
Simms
To: <A
title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Tuesday, August 20, 2002 1:37
AM
Subject: RE: [RT] GEN: DEFLATION AND
GOLD....
The first
would occur only if actions to stop the second one
fail.
<FONT color=#0000ff
size=2>
Tell-tale
signs of the second:
1)
steepening yield curve
2) widening
corporate vs. treasury bond spread
3) CRB
index declining
4) real
estate prices stall, then reverse
5) falling
equity prices
6)
increased bankruptcy levels
<BLOCKQUOTE
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<FONT face=Tahoma
size=2>-----Original Message-----From: Charles Meyer
[mailto:chaze@xxxxxxxx]Sent: Monday, August 19, 2002 1:43
PMTo: realtraders@xxxxxxxxxxxxxxxSubject: Re: [RT]
GEN: DEFLATION AND GOLD....
Simms-
You wrote that: "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..."
Is the scenerio then EITHER inflationary
depression OR deflationary depression;
assuming things got out of
hand?
chas
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=prosys@xxxxxxxxxxxxxxxx
href="mailto:prosys@xxxxxxxxxxxxxxxx";>M. Simms
To: <A
title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Monday, August 19, 2002
12:27 PM
Subject: RE: [RT] GEN: DEFLATION
AND GOLD....
<FONT color=#0000ff
size=2>DEPRESSION and DEFLATION not EXACTLY the
same......
<FONT color=#0000ff
size=2>
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.
<BLOCKQUOTE
style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #0000ff 2px solid">
<FONT face=Tahoma
size=2>-----Original Message-----From: Charles Meyer
[mailto:chaze@xxxxxxxx]Sent: Monday, August 19, 2002
11:39 AMTo: REAL TRADERSSubject: [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.To
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