Date: Mon, 22 Nov 1999 22:52:37 -0500 From: Enrique Diaz-Alvarez <enrique at ee.cornell.edu>
Astonishing spin from McTeer, President of the Dallas Fed Reserve [all quotes taken from David Tice's commentary at http://www.prudentbear.com/markcomm/markcomm.htm; he has been calling this a bubble for about two years]:
"I donít believe the negative version, which focuses on our trade deficit and declares us uncompetitive. I favor the more positive view that has the capital inflow as the independent variable, based on good investment that we are over-consuming and relying on foreign saving to finance our domestic investment. Our apparent role as consumer of last resort for the world certainly expanded during the Asian crisis. Consuming is dirty business, but somebody has to do it."
Those furriners are so desperate to invest in the US, you see, that they just *forced* us to take their stuff in return for IOUs, to the tune of 25% of GDP. We didn't want to, I swear, but they just wouldn't take no for an answer.
"One of the reasons I believe the stock market is not in a bubble is because people have said "boo" to it before, and prices have started down, and then they just start back up again. Stock buyers are aware of opinions about stock prices and Iím not going to second guess them."
You see, if most people are buying stocks, how can this possibly be a bubble? Now, if everybody thought it was a bubble and was out of stocks, *then* we'd have a bubble. I guess. Whatever. Party on, dudes!
Wow. I've always been sceptical of Dennis' eurofetishism, but it's hard to hear such cretinous blather and not agree with him. Whatever the faults of the ECB, manifest incompetence does not seem to be one of them. Compare the above to this quote by ECB's head, Duisenber:
"Being predictable in no way implies that the central bank intends to follow the market. On the contrary, the causality should run in the other direction. [...] "When we see figures on M3 and credit growth we want to know ñ and itís fairly difficult to get it ñ where is this credit going to, what is it being used for? To what extent could it lead to asset price inflation? To what extent is it being used to finance capital exports? To what extent does it have an impact on the exchange rate? To what extent is this used to finance merger and acquisitions activities?"
Enrique
...Statesmen and patriots plied alike the stocks, Peeress and butler shared alike the box; And judges jobbed, and bishops bit the town, And mighty dukes packed cards for half a crown...