Hi Karen, I'm sorry to hear about your parents' pension losses due to Enron et al.
At 22:42 21/07/02 -0700, you wrote: (KWC) <<<< Harry, do you think there will be enough of a market "bump" between now and November to reassure the American public that their leaders are doing what is best for the country, and by global extension, everyone else on this domino planet? >>>> I imagine that Harry will say that he can't possibly foresee what will happen. I'd say the same but I'm inclined to think that there'll be another downward bounce by then rather than an upward one. Harry doesn't believe much in Price/Earnings ratios of shares, but I give them quite a lot of importance. At present, American shares are still around 40 -- that is, a 2½% return and I think they're bound to reduce to the long-term average of about 14/15 -- that is, a return of 7%. My reasons for believing that shares will continue to go down is that (so we're told) it's only the individual amateur investor who's been selling so far. If company results continue to be poor in the next few weeks/months then the professional investors will seriously start selling and then the market could fall further and very swiftly. This possibility must be keeping the Bushes awake at night. (KWC) <<<< My gut feeling is now it will be the politicians' and the economists' jobs to see if they can persuade everyday Americans, not just serious bargain hunting investors, that there is good, substantiated reason to believe in what they've been told about an forthcoming economic recovery. Dubya and Dick have their hands full, considering they don't have clean hands. As much as I'd like Dubya to be a one-term president, I certainly don't want anymore stumbling erratic leadership that could make things worse. >>>> The evidence is quite clear so far! As soon as Bush speaks, then the stock market slides. This is a classic situation much investigated by social psychologists. Such is the degree of suspicion by the public, that the more that politicians (or even academic economists, or even Greenspan) attempt to speak reassuringly on the matter, the more they'll be disbelieved. No, the only way that Bush could improve the situation is to quietly get down to getting appropriate legislation onto the statute books as soon as possible. (I agree with Alan Blinder's recent NYT op-ed "Stocks are only part of the story".) Whether Bush will do so, given the fact that he'll be heaping even more coals of fire on his, Cheney's and White's own heads is another matter! (KWC) <<<< To paraphrase something JK Galbraith said years ago, once those who survived the 1929 Crash and Great Depression are gone, the lessons of those years will be forgotten and we will repeat them. That is NOT an indictment against economy professors, mind you, but a recognition that people don't always learn the great lessons permanently. History shows that over and over. >>>> M'mm, I don't think Galbraith is correct on this. I think most economists would agree with Harry's oft-repeated solution on FW that what the 1930s required was spending power. Well, I think that if the US$ continues to slide steeply then America will join Japan in deflation, with Europe not far behind. Because of the experience of Japan in the last 10 years, and because of the 1930s experience -- deadlock in both cases -- this deflation is something that no western government would dare contemplate, so I think it's entirely possible that the government printing machines will get busy again and we'll be in for a few years of rampant inflation, as in the 70s -- never mind all those dear old ladies in Cheltenham who have their life savings invested in building societies. (KWC) <<<< I look ahead and see, just to name a few, too many baby boomers who can't afford to retire, houses being remodeled to accommodate multiple generations again (not so bad), and marketing programs taking a 360 degree turn away from the golden retirement too many people believed would happen. There could even be some positives to come from this psychological and financial jolt. Since we still teach about the great impact the Great Depression had on a half century of American lives and institutions, what lesson plans are being written to catalogue and understand this today's events? I certainly don't want anything else worse to happen, certainly not any more of my own family members, but if there is anything good to come of sad circumstances like this it may be that people will think more about achievable goals, realistic lifestyles and appreciating value in what they already have in each other. I mean, it really doesn't matter that at my age I will continue to drive a used car because I'd rather have an updated PC, or that I'm simplifying and qualifying my life. What matters is what our leaders can accomplish and what young people like my 25-year old daughter believe and dream about. >>>> I don't see much good news in the years ahead, I'm afraid. I think Bush and his ilk in Enron, WorldCom and elsewhere have already done far too much damage for any substantial investment surge. You might console yourself with the thought that during the 1930s Depression, America survived much more peacefully than Europe. I think western Europe is in for much greater turbulence in the coming years. Keith ---------------------------------------------------------------------------- ------------ Keith Hudson, General Editor, Handlo Music, http://www.handlo.com 6 Upper Camden Place, Bath BA1 5HX, England Tel: +44 1225 312622; Fax: +44 1225 447727; mailto:[EMAIL PROTECTED] ________________________________________________________________________
