Mr. Charles "Please come home for Christmas" Brown

Rakesh Bhandari bhandari at phoenix.Princeton.EDU
Sat Nov 21 08:49:47 PST 1998



>>Yet, just as the ascent of manufacturing
>>profits was key to the stock market's vertiginous rise, the fall in
>>manufacturing earnings cannot but bring the stock market boom to an end,
>>
>Thanks Charles. What a lovely thing to say

Hi sly Paula, I think Charles is quoting Brenner here. But following the 1929 logic of Henryk Grossmann, stock market booms always outlast the production boom because dividends are still being paid on the boom period; not only is this case,, but when the production boom has passed its peak and the decline has begun, money not needed for the productive process is added to the volume of money already in use on the stock exchange, and being directed to make further profits, pushes up share prices still higher. The apex of the stock exchange boom is therefore reached later than the point at which the decline in actual production has begun. Greenspan must of course be worried that his new easy credits will not find their way into production but speculation because in a crisis of overproduction, money can only produce gains on the stock exchange. So despite all those bad earnings reports, I don't think Brenner should pull his money out of the stock market quite yet. He may be able to ride it to 10,000 before the bust. best, rakesh



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