Forum Archive Index - October 1999

[mortimer <xtr123408@xtra.co.nz>]

Erdman's World of CBS Market Watch say's
Should Alan Greenspan intervene an burst our bubble (ie US stock 
Market) before it's to late? It's already to late, the economist claims. 
"there are to examples of central banks deliberately trying to burst a
bubble," it states. " America in 1928-29 and japan 1989-90. both
attempts ended in tears because these central banks acted to late.

If Greenspan had taken their advice in April of 1998, the Economist
claims, and burst the bubble by raising interest rates, we could have
had a soft landing. He ignored their advice, resulting in a bigger
bubble today than ever before. And now the risk of popping is to high,
since the bigger the bubble is, the bigger the bang will be when it
finally pops.

A bang or a hiss?
All this is hardly new. The basic flaw in this type of analysis, in my
judgement, is that as we learn from children, we can let the air out of
a ballon by either popping it or letting it out slowly.

If we indeed do have a bubble, then what has been happening recently in
New York is definitely in the latter category, namely a gradual
adjustment of asset values to more realistic levels. If this continues
in such and orderly fashion, you can forget about a panic leading to a
crash leading to a depression.

this is part of the article.

Regards Les.

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