> Yesterday Floyd Noriss in NYT and Bartlett today in WSJ show that buying on
> margin hardly accounts for much of the market at all (perhaps 9% in the
> late 1920s, to less than 2% today?)--the reasons for the bubble must be
> sought elsewhere.
I think it was closer to 20% in 1929. The absolute percentage is rather small, but the marginal effect in the last few months appears to have been great. Margin debt has been growing at somethjng like 10% a month. This is roughly $20 billion a month of additional demand for stocks, comparable in size with other demand sources (buybacks and 401Ks).
> Evidence is that bubbles tend to encourage margin buying,
> rather than visa versa.
I think it works both ways
> Fed restrictions may have little effect, and only
> force resort to leveraging of other assets to participate in bubble econ.
> by the way, interesting front page WSJ article today, obnoxiously titled
> something like US brains vs Japanese brawn, on US profits from
> intellectual property rights. Obviously a more profitable business than
> making things, e.g., cars.
Yeah. Maybe prrft.com will patent the fart and collect royalties from worlwide flatulence. I don't see how else this non-saving, non-manufacturing cauntry can ever even begin to service its foreign debt.
-- 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