Date: Wed, 22 Dec 1999 22:54:48 -0500 From: Enrique Diaz-Alvarez <enrique at ee.cornell.edu>
>From Tice's twice weekly commentary. Yeah, Austrians are full of crap.
On the other hand, it is a bit surprising that T-bill rates will not
stop rising in spite of Uncle Al's unprecedented orgy of money printing,
with almost daily coupon passes and twice-daily repos (I know, Y2K and
all that, but you don't see other central banks running the presses 48
hours a day, do you?). Especially given that, excluding food, energy,
housing, cigarettes, health, education and adjusting everything else for
"quality" improvements, there is no inflation, dude!. It would be
interesting to see what would happen if the Bubblemeister stops
absorbing billions' worth of T-bills almost every day. Are the Japanese
cashing in a few IOUs?
http://www.prudentbear.com/markcomm/markcomm.htm
[...]
it certainly appears to us that there are indications of something very
akin to Mises "crack-up boom." Seeing the buying power of money sink daily against NASDAQ, and convinced that the Federal Reserve stands ready and
able to keep the party going in perpetuity, a virtual buyers panic has evolved as the crowd dumps cash and borrows aggressively to buy stocks. As such, in November alone, margin debt increased a staggering $24 billion to $206 billion. So far this year, margin debt has increased $65 billion, or 46%. For comparison, margin debt increased $15 billion last year. Furthermore, total margin debt has almost tripled since ending 1995 at $77 billion. In past commentaries we have also highlighted the explosion of derivative trading that is adding massive, if not quantifiable, leverage into the stock market. And, of course, this does not include all the indirect borrowing that has made its way into the stock market from an increase in mortgage and other debt for the household sector, as well as unprecedented borrowing to finance stock buybacks from the corporate sector.
[...] over the past 14 weeks our already over-leveraged financial sector has increased commercial paper borrowings by another $123 billion to $1.1 trillion, broad money supply has increased by about $190 billion to $6.4 trillion
Enrique
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