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Author: instride Three stars, 500 posts 10+ Year Anniversary! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 10561  
Subject: Re: The point of no return. Date: 3/6/2004 9:54 PM
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Life, however has become so utterly wonderful since I retired from my job that arithmetic of that sort falls into the bottom of the list of opportunites that compete for my time.

Ed,

Congratulations. I think that is the hope of most people, including myself, to be fulfilled rather than bored in retirement. That is , assuming I ever can retire.

If I'm right in my opinion that the last great depression was caused by an excess of debt, then that is frightening because there is a wealth of data showing how more we are leveraged now than in 1929

I have read that it is far more complicated than that.

In response to the economic downtown of '20-'21, a boom created by low interest rates, extension of free trade, “scientific corporation management, technology improving productivity, revocation of antitrust laws, prohibition, lower taxes, as well as a demand enhanced by consumer credit.

Usually a media technology breakthrough coincides with bubblemania. During the 20's, it was radio. Marconi's spark gap morse code radio communication was refined to work on a single wedge of frequency at the same time someone figured out how to superimpose voice on this carrier wave (Amplitude Modulation).

There was also a false sense of security from the presence of the Federal Reserve created in 1913. It was to act as the lender of last resort to prevent bank panics like the one that had occurred in 1907.

The Smoot-Hawley Tariff Act enacted by Hoover in response to trade concerns is considered a significant factor by many scholars.

According to Edward Chancellor in his book, Devil Take the Hindmost

The seeds of a bubble are sewn in a period of prosperity.

Gross complacency of the “ruling class” or Laissez-faire attitude/relationship of government towards the investment world.

The investment fever spreads to all classes of people.

There is a general lack of knowledge in these people regarding what they invest in (driven by fantasy).

Speculative cycles seem to be associated with crisis (e.g. poor harvest, war, problems with public finance (associated with expansion and contraction of credit). BTW, I love these new instuments of car loans. Some consumers are now selling their late model cars for less than the remaining balance of the loan (new cars lose book value quickest while they are new). This deficit is then added onto the new car loan creating loans well in excess of the new car purchased. I believe they are called Stacked Loans in the auto industry jargon.

A stronger than usual feeling of patriotism commonly coincides with the inflating of bubbles.

Misallocation of investment capital occurs in the investment world

Usually starts in a sector but as the mania progresses, the quality of the stock attracts that attracts speculation starts to decrease. This further fuels misallocation of capital. I have noticed that high beta stocks far outperformed low beta stocks in 2003. Although, I have noticed a shift in which stocks seem to be leading the way in the past month.

Today truly seems to fit many of those characteristics.

I'm just not sure that anyone is doing the math in Washington and staying on top of this fundamental analysis

You're right. I believe Bush campaigned on cleaning up fuzzy math. Instead, this fiscally unrestrained administration's expansion of the fuzz is developing into weapons of math destruction.

With rainforest destruction and rapidly rising worlwide oxygen consumption, is there a huge unused capacity for plants to produce more oxygen as CO2 levels rise, or is there a point of instability somewhere relatively close where the plants will not be able to keep up? My personal opinion is that the plankton, grasses, etc. can easily carry the load for a long time, but what do I know? I would like to think that someone is checking on this too, rather than flying to Kyoto in jet planes for silly conferences.

This is more stonewall politics doing business as usual. The plan seem to be, focus in on the theoretical part of the environmental platform and ignore the most salient points. The Greenhouse Gas Theory relies on models and does not have enough prospective study data to make it rock solid. However, the medical data is solid and irrefutable that other products of fossil fuel combustion (such as particulate matter, oxides of nitrogen and sulfur, and incompletely burned hydrocarbons are significant causes of Asthma, chronic obstructive pulmonary disease (COPD), various types of cancer, and a certain percentage of heart disease.

Crime usually has a strong correlation with the unemployment numbers.

Funny that you should say that. I heard on the news that crime is up in the Boston area for the first time in almost a decade. Also, there are many people lacking in regimentation (IMHO), in that they stealing from themselves by leveraging their home equity to live above their means. A recent patient of mine was proud of the fact that he owns less equity in his home now than when he bought it over 20 years ago. Just wait till the debt well runs dry. Then check the crime numbers.

And what is this about "leaving the work force"? How do they eat when their unemployment runs out?

That is where the government system of social programs including food stamps, general relief, and most importantly job retraining come into play. Some people abuse the system. Many others have been saved by the system. I have seen both in my lifetime.

Instride

Fuzzy Wuzzy wasn't fuzzy. Was he?
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