I am not an expert, but I will make some comments on your views below.
visualseep...@[EMAIL PROTECTED]
wrote:
> Cutting rates and flooding the market with dollars is not going to
> solve a fundamental problem. That is, there are no bubbles left to
> blow in the economy.
My understanding of the fundamentals is that i) the whole sub-prime
problem (caused by greedy-selfish lenders who misled everyone and
avoided regulation and oversight) contributed to the housing bubble
that followed the dot.com bubble), and ii) the tax rebate plus the
rate cuts are actions by the govt to counter-act the economic damage
by "i".
I use the word "counter-act" because no one and/or no thing has
ultimate control over an entire economy. It is too complicated for
even the experts to figure out. However, I think it is better to do
something than do nothing.
> In the 90s, I have counted 5 to 6 major bubbles.
What you call bubbles could also be called economic "cycles" (up-down-
up-down repeats) that are part of economic history going back even
hundreds of years. I can cite references for 500 years ago.
Some of these
> bubbles had an additional spinoffs - a productivity boost. E.g. like
> the computerization of businesses. From low oil prices, to the
> collapse of the USSR, to the emergence of the Internet, to victory in
> the Gulf war that Arabs were made to pay,
Kuwait was happy to pay the US to do the dirty work of kicking Saddam--
doing even more dirty work-- out of Kuwait.
to the stagnation of the
> Japanese economy. This was the decade to be in.
>
> Post 2000, there has been just one large bubble - the housing market.
Money came out of the dot.com bust and had to go somewhere.
> Conversely, there were negative bubbles like the 911 bubble
You can't call it a bubble if there was no great increase before the
crash. 911 was a steady market followed by a crash, and after the
crash there was a relatively rapid recovery.
and the
> Iraq war bubble
What you call the "Iraq war bubble" was just a stimulation of the
economy from war spending. War spending, today, is a much smaller
fraction of GDP than ever before. However, I am still against the
war.
> but the housing market kept the market from falling
> even if the dollar was declining in value.
I think you are confused about two things: one, the housing market is
part of the US internal economy (the US economy) and almost
independent of the dollar value, and two, the dollar decline is
connected to other currencies (the world economy) since it is related
to the exchange rates.
> Now in 2008 there are no foreseeable bubbles.
You are completely ignoring the rise in the Yen and Euro (in
comparison to the USD). These are large increases and have been going
on for over a year and not getting as much attention in the news
media.
You are completely ignoring the oil prices (and some other commodity
prices on the commodity markets). Lots of people are complaining about
the price of grains and blaming ethanol but at least in the USA, we
had a lot of droughts last year which killed a lot of the grain crop
but almost no one talks about this.
Maybe a small ex****t
> bubble as the dollar declines.
You forgot that ex****ts _to_ the USA will be hurt, also. If the USD
can't buy as much, then all these 3rd world countries that want to eat
our USD and our jobs are going to be hurt more because most of the
increase in their GDP is dependent on their ex****ts to the USA.
Ex****ts to Japan and Europe, at least for a while, will be stimulated
and we already see this from actual ex****t data AND big increases in
tourism in the USA from visits from Japan and Euro and even China (and
since it will hurt tourism from US visits to outside the USA), so you
need to think about that, too.
> Perhaps a distant biotech bubble when
> they create replacable organs or other genetic discoveries. Perhaps a
> bubble in MEMs. But nothing in the immediate horizon as far as I can
> see.
There will always be bubbles and cycles as long as new things come
out, or some old things become im****tant in a new context. Antiques
and paintings by famous artists are also subjects of incredible cycles
(follow Sotheby's and Christies for the most outrageous).
> So just like clockwork, the market will initially rise after the rate
> cut... quickly realise that there's nothing coming but debt repayment
> and dollar devaluations... and sink into the abyss.
So, are you a pessimist who thinks the sinking into the abyss will be
irreversible and final? If so, then tell me why. I think it will just
be another cycle like in the past. The only fear is that poor people
with no job or no money will be hurt badly, also just like in all past
bubbles that burst or business cycles that turned down and led to
layoffs that hurt lots of people. And, I am sorry that this happens.
Everyone needs to save some money somewhere for the rainy days.
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