This message is in MIME format. Since your mail reader does not understand this format, some or all of this message may not be legible. ------ =_NextPart_000_01BD2A85.511C5470 Hi Doug -- As far as I can see the Fed is controlling the market very closely these days with 3-month treasuries. At least when the market is down interest rates seem to be down as well and conversely. Thus it seems that the Fed is preventing a real melt down in stocks while at the same time denying any impulses the market may have to go up. Thus you may very well be in luck and the bear market be well established fairly soon. The recent experience we have had with central bank control of the stock market is in Japan from 1987 to the present when the market gradually fell from the 38000's (?) to the current 14000's (?), a truly prolonged bear market. At the same time the short interest rate was reduced below 1%. It is interesting to attempt to apply this history to the current U.S. situation. For me the most upsetting element of Wall St. was the chart on p. 81 showing the net U.S. credit position since 1952 as a percent of GDP. From a break even position in 1982 we now are in hock for 16% of GDP, an amount that is increasing rapidly. The Fed must be aware of this, and must also be aware of the powerful effect interest rate cuts can have in reducing the value of the dollar and thereby tending to restore some sort of trade balance. On the other hand it may be that the situation has gone too far already, and if the dollar were to begin a long descent speculation would force an immediate crash and an abrupt end to the current world economic system, i.e., with the dollar as the international currency and the U.S. as the consumer of last resort. Indeed there is real peril here since roughly half of international trade consists of INTRA-corporate transfers and, except for the EC and Japan most currencies are pegged to the dollar anyway. Thus it is not clear that devaluation can restore the U.S. trade balance, at least at dollar values that are acceptable to speculators and in terms of its role as the international currency. Yet what else can they try? At some level of international indebtedness the willingness of speculators to hold dollars will disappear, and it would appear from your chart that that day is fast approaching. At least the low interest rate approach has some hope of saving the U.S. stock market from a true melt down and could provide benefits both domestically and internationally in propping up demand and staving off the global recession (depression?). Dave ---------- Sent: Friday, January 23, 1998 11:17 AM To: [EMAIL PROTECTED] Subject: Re: Japan's MoF Jay Hecht wrote: >The "bears" in the latest Barron's roundtable all repeat the same thing. >Another "Rational Expectations" hypothesis - all assertion, no facts. I can't read that crap anymore. Either makes me want to scream or go to sleep. All I care about is that a bear market be well established by the time the paperback of Wall Street comes out. Doug ------ =_NextPart_000_01BD2A85.511C5470 b3NvZnQgTWFpbC5Ob3RlADEIAQWAAwAOAAAAzgcBABoAEgAMADoAAQBJAQEggAMADgAAAM4HAQAa ABIABwAyAAEAPAEBCYABACEAAABDODAzOTc1NDJFOTZEMTExODg4RTAwMjBBRjlDMDMwOADxBgEE gAEAJAAAAEJlYXIgTWFya2V0PyAoRm9ybWVybHkgSmFwYW4ncyBNb0YpAMQLAQ2ABAACAAAAAgAC AAEDkAYAGAsAAB0AAAADAC4AAAAAAEAAOQCgwebwryq9AR4AcAABAAAAJAAAAEJlYXIgTWFya2V0 PyAoRm9ybWVybHkgSmFwYW4ncyBNb0YpAAIBcQABAAAAFgAAAAG9Kq927FSXA8mWLhHRiI4AIK+c AwgAAB4AMUABAAAADQAAAFJJQ0hBUkRTT05fRAAAAAADABpAAAAAAB4AMEABAAAADQAAAFJJQ0hB UkRTT05fRAAAAAADABlAAAAAAAIBCRABAAAALggAACoIAACBDgAATFpGdcKG1PP/AAoBDwIVAqQD 5AXrAoMAUBMDVAIAY2gKwHNldO4yBgAGwwKDMgPGBxMCgzIzEw9mNAPFAgBwcvZxEiAThX0KgAjP CdkCgAcKgQ2xC2BuZzEwMw8UIAsKFVIB0CBIaSBCRAhgZyAtLQqFQRUEIGYKwWEEIEkgY0MDkRHw ZSB0aB0QRj0JgCAEABygAiEDYGxsTwuAG0AdMgDAcmsSACC6dgSQeRygFyAR8GwfgMMdMRHwIGRh eQQgA/DxHTAgMy0EYAIwIQAeEMZlHGAIcnMuIBNwBUD2bCHBBUB3HUADoB6pHbHYZG93A6ALgHQE kAeQuQVAcmEkoAQgHPFtHSC4byBiIGEkQhxhdx/gfwMgAHAdkB3hH1Ef0iJBVPxodQQgIOAlYwQg HTAlILsdKhXwZR9QAjAeYmElAPchwAMgB4BsBUAkNRzgJcB0Y2sgsWgDEB0QKQVzvmEHgB0gB3Eg cAnweSpTwy3QHaBtcHVsEfAowr8exwDAH4ARwB9QJbJnJdD0dXAn1nkIYC+jH1Mmo/8l8SuhCkAs ACbjHTIl8ArBvx7lJfEmoyTRAaAeUHMdQJMdkBwgaXIf8XNvAiC+LgqFCoUoAB0QF5BjKiH5NMB4 cAZxCfA3kCaRL+T/EcAdkCDTN5IlEDJBAHAy8PEd5SBvZizEK+IjiSuhHEphCrADoANSIDE5/Dg3 JbIdMinhEfA3sSMO2wnAOSB1B0Af8WYmsjzzUR0yMzgwQSAnBCAodD8pPYZjCHAXkDexMfo0QScs KoEeEC6gH4AV8H8XERlAHYEzmSJELNws02j/FzEkfCDAHGEXkTLQRHMXIOkH4DElNk1JPBUkpB5j vyXQJSAkoC6AKRFLcXALUD8gAh2xTLElwB9xQc1VLvZTIkAAkHQ/wCpANiEiUP5GBbFGZQRgItEw oBHxKkM/H+AlkDeiOvEZ/AxAIFf/P9EGAEVAGf1IA0HzEcFRcXMDoDCxODFGwgPwHnVu3x8hTmMF AAmAKFFwH8Ag4O9PEU6hOFI9QDUSIBxhKpDHOAE3kzrxR0RQT0I9Av0qkGIhsTLwKgJXeCuhPUH7 EiA4kW5JAQrAMnNG4DLh4wIQBcAxNiVZhUNhJlH9BGB1N7Eo4zwzVxEcYB5isSUQcGlkJ7UdVG0o IP00M2FIEFzROvMEAF5iYVW/B0A2AGG9PeEkQASQZi6g3zTADdAFkEceQjB0HcEDke8v8yuhSFMe ZnYHQApQOubfJDAeQBwyMyQXkGIgAQnw/1dASzQkwgWwLPEDcGuSVQJ/OwE/kTNxB0AAcDeQNk1P /SM0b2oCL+EnAShRL7Il8f8o5063L+EEIDBwVoAlsSXQ5RwjbCGxZHlixAaQaQr3ZOEwIyXwZyuh KpBEMi2hewTwN6JzOABCMAtgV8N3/QhgbDVxBbA4YQORB3AHgP9XQGZjJRA1QCbjXoJakDCg/zfB MyJB3HaANcAdkAWRXIB4bWljHOAgoEuxQ2Bpfi5tQENgINNpGi7kJINu907zKtFCNGMfgDMWTmNU Zv8CICHgB4AFwDrxC2Ak4geQ+xcxIkFJJwAJ4GnlHaIqs784AgMggpNYFANgGzBoH/H9EcBsOwA6 8X3MbISAck0BAwQgOvFJTlRSQS3/BaFXgEfDOdEAgEAgEeAm4j9DYDfgN5AFMV2CHTJFQ38m4zyU UCN+pSIRXLM4AGf3RGI9lWlXeUgQJ8odsVyA/4tRIqGJ8ikBDbBognDUHLL/azZ/d2yLQ2Eiho+y aWRog/8oxVzCANCJgjUBMCN1xgWw/4jzK5IkoSixhUJmwR4hLIH3fW9+eTZNWR8hIwApAR/g3yBR HLIdMSABH3A/IlNrs78ioB9QOtOYvAuADbBiJKD+ZFaABBEdMgPwHkOfQzrx/5X6JcFG4HaxaVQg sibBV0D/LRBMUDOhcrV6YnaiowQ85P8xQQXAVNQo5Y+yL8EdsRwg/2NCTFADYADQLFAZQCJKHTL/ SPJHPKcmcSNrs0bgOACgg/8wAB5mTmQ7ejzzQ4MewSsX/yb0dqJEAauwbLIJ8A3Al7L/BuAg8SQw B4EqQBywP+KWtP+Y2R/xK6FEAUxQHmIwoC2hfwOBeJIdkDThq7M68DsEZ98XIGzhN2MEEFfSKA2w PgL3tjJBkDZNRDABNlwK9B5Q50KwQsACAGktueMM0Lnj/wtZXcAKoANgJKBlkRtgvIbfCoe7Owww vAZaIjq9jrwGOwyCGwRICfB2gARwW1NgTVRQOmQjEcHCQJE8sWl4LgWgbV29L/++PQZgAjC/b8B7 WiBggCCQm0NgPJBuP8AfcTIzQ2BHPUA9UD0wMToxPXBB5k3Dn749VG/F38B7OACgbi1sQGds8Xgn wP5jIeCngQWgfAA/sMnPxK44dWJqZYHL78B7UmXH0cA8k0FRTW9GuI8LKPsUIgwBYw3hvAY8kB+A jvFu0iJ6Un4mRTfxZZBO89nxaO55V4AgIh2xLdwzHGAR8P8AIE8RQ2BcgBwRZZAiMElt/RyiJ4Fi OSEo43gRs6AuMfcEYBeQIkBFIOFu4QDAHxD/BCAtMUgQXvKV0V/CJaAFsXcwcSXA1QVzIqCJkCJA Qf8mwRySlOIG4GawHaKUhDOP/zSealIdQNUFRkfVMDgBOiD/MuE68VLVCdGLUbDSOuBmsP+3Xhsh NlzVD1IYvAbyJRaxAgD1AAAAAwDxPwkEAAADAP0/5AQAAAMAJgAAAAAAAwA2AAAAAAACAUcAAQAA ADAAAABjPVVTO2E9IDtwPUJMUztsPURDUENTTUFJTDEtOTgwMTI2MjMxMjU4Wi0xNTY5NQAeADhA AQAAAA0AAABSSUNIQVJEU09OX0QAAAAAHgA5QAEAAAANAAAAUklDSEFSRFNPTl9EAAAAAEAABzBw x+bwryq9AUAACDAg+Gg5ryq9AR4APQABAAAAAQAAAAAAAAAeAB0OAQAAACQAAABCZWFyIE1hcmtl RTQwMDYwOTcwNUNEODgzMkEyQTZAZGNwY3NtYWlsMS5wc2IuYmxzLmdvdj4ACwApAAAAAAALACMA AAAAAAMABhDdM9XcAwAHEDEJAAADABAQAAAAAAMAERAAAAAAHgAIEAEAAABlAAAASElET1VHLS1B U0ZBUkFTSUNBTlNFRVRIRUZFRElTQ09OVFJPTExJTkdUSEVNQVJLRVRWRVJZQ0xPU0VMWVRIRVNF NENFOUM3RDAxMTlBRTQwMDYwOTcwNUNEODgzMkEyQTZAZGNwY3NtYWlsMS5wc2IuYmxzLmdvdj4A 46E= ------ =_NextPart_000_01BD2A85.511C5470--
