No, it's not a parody of the Thomas Pynchon novel . . .
I'd love to hear Doug Henwood's random thoughts about the possible fall out
from the Bre-X fiasco. My own guess is that there will be a massive
intervention in financial markets next week by central banks and
institutions in an attempt to prevent a collapse. The intervention may or
may not be successful in the short run, but the medium term consequences of
a successful rescue will be to create a huge overhang of unwanted paper that
will continue to depress the market for the rest of the century.
I want to be clear that I'm not saying that the Bre-X collapse will be the
_cause_ of the panic, only the trigger. Bre-X is tiny, insignificant -- but
it is emblematic of the "Dow 7000" mob hysteria. The rise and demise of
Bre-X couldn't have been more "fictional" in its scripting: *bankrupt*
promoter spends last $10,000 to fly to *Indonesia* (exoticism, repression,
corruption) to stake his claim . . . first assay results claim the gold
find of the century; political intrique and machinations (Bush, Mulruney,
Suharto) in the bidding to develop the mine . . . then, when the plot
turns, the chief geologist leaps out of a helicopter above the Borneo
rainforest . . . trading in Bre-X is halted . . . the share price continues
to plunge on the "gray market" . . . the due diligence assay results show
insignificant amounts of gold . . .
Can the dimensions of such a "morality tale" possibly be lost on the mutual
fund mob?
Regards,
Tom Walker
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