Bubblemeister Al tightening!? Ho ho ho, that's a good one.
He may be a mediocre shill, but he isn't stupid. He'll keep doing whatever it takes to keep the bubble going. That means printing money, encouraging ever-growing indebtness of households and busineses, and bringing out brain dead economists to prattle about new pairs of dimes until they are blue in the face.
You are right that rising interests rates threaten what, according to the flow of funds, has been the mechanism underpinning the bubble: companies borrowing money to buy stock (theirs or someone elses) at historically overvalued prices. However, it is difficult to guess what the breaking point will be. Once corporate management decides to sacrifice the long-term survivavility of the company to short-term stock price spikes, it doesn't seem like paying an extra point or two on their debt will make much difference.
I think there is a good chance that, a few years from now, Lou Gerstner will be called to testify before a congressional committee about how he spent the entire cash flow of (now bankrupt) IBM plus a few billions in borrowed money to buy back historically overvalued and largely dividend-free IBM stock, while simultaneously unloading his entire holdings of company stock.
> But I don't think you'll see a wholesale shearing until the Fed turns
> hostile, whenever that may be.
>
> Doug
-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique