Ralph
02.02.2001, 05:57
Bei TheStreet.com gibt es einen Redakteur, Peter Eavis, der die sonst dort realistisch eingestellten Kollegen, regelmässig mit seinen Kommentaren zum Kochen bringt ..... vor allem James C. Cramer ist mit ihm auf Kriegsfuss. http://www.stock-channel.net/Board/smilies/biglaugh.gif
Hier mal sein neuester Artikel zur eigenen Bewusstseinserweiterung:
***********************************************************
Fed Powerless as Economy Purges '90s Excesses
By Peter Eavis
Senior Columnist
2/1/01 6:16 PM ET
Most readers will have tried the hair-of-the-dog cure for a hangover at least once. But, as you will have probably discovered, drinking more only forestalls the comedown for a short while -- if at all (forgive the reference, but this is Detox ).
In exactly the same way, no matter how much liquidity the Fed injects into the economy through its emergency rate cuts, it can't prevent a deep adjustment after all the excesses of the '90s. The substance that got us high is bringing us down. This axiomatic economic rule has been bolstered by a number of recent economic releases. Yet so many economists, and even leading business publications, are locked into an outmoded Keynsian belief that the economy's fate lies in the hands of the central bank. The Wall Street Journal, of all publications, Thursday fell into that trap, with a front page story editorializing thus: "Fear of a recession can quickly bring on the real thing. 'Animal spirits,' the British economist John Maynard Keynes once wrote, can hold the key to important economic variables, such as business investment."
Warning Warning
Keynes lost his shirt investing in the stock market in the '20s and '30s, and anyone who buys stocks on the basis of a Fed-engineered economic recovery is danger of that too.
Consumer confidence is shot and factories are slowing. So here's why the elixir of easier money won't work for long.
The bad investments of the boom simply can't survive -- under any monetary climate. This means capital goods production will slump, which will smash much-loved companies like Cisco (CSCO:Nasdaq - news - boards) and Oracle (ORCL:Nasdaq - news - boards). It'll also mean layoffs, such as those recently discussed regarding GE (GE:NYSE - news - boards), and price wars as firms fight to sustain margins.
We've all seen wealth-destroying pipe dreams like priceline (PCLN:Nasdaq - news - boards) crash. But, as Detox has written before, the equity market is merely a more visible indicator of the stupid investing going on in the "real" economy. Anecdotally, we've all experienced how superfluous technology can become. Whenever Detox writes on business software firms, a flurry of email arrives saying how infuriating it is to deal with egregiously overpriced products from the supplier in question. In minutes from their Dec. 9 meeting, released Thursday, Fed governors alluded to overinvestment in IT.
The profitability of using and producing such software and equipment had been overestimated to a degree, and disappointing sales and a better appreciation of risks had resulted in much slower growth in production of such equipment and sharp deterioration in the equity prices of high-tech companies.
The impressive productivity numbers of the past five years have led most people to believe that the boom wasn't leading to poor investment choices. But Northern Trust economist Paul Kasriel published groundbreaking work this week that shows productivity numbers are slumping as the economy slows. New Economy believers have maintained that productivity will hold up in a slowdown. Based on calculations you can assess on his Web site, Kasriel says: "We can look forward to next week's productivity report showing a slowing in productivity growth to something in the neighborhood of 1-1/2% or less. How 'Old Era.' "
Unlike Diamonds
Producers' big mistake was to invest on the basis that the boom will continue forever. For a while, due to the Fed's largesse, it looked as if consumers would keep spending and providing the demand for their goods. But the consumer inevitably has to call it quits at some point and cut consumption. The adjustment is even harsher after a period of high borrowing and minuscule saving. Household borrowing has nearly doubled over the past 10 years, leaving households with over $7 trillion of debt, while the savings rate has plunged into negative territory.
The Fed calculates an average balance sheet for households. Fourth-quarter figures, not yet released, are likely to show a sizable drop in net worth as certain assets (like stocks) fall in value more quickly than liabilities (like borrowings).
And if economic uncertainty forces individuals to save more, they will necessarily cut back on current consumption and depleting demand. The dot-com economy is becoming the detox economy.
Source: TheStreet.com
***********************************************************
Ralph, ohne Kommentar
Hier mal sein neuester Artikel zur eigenen Bewusstseinserweiterung:
***********************************************************
Fed Powerless as Economy Purges '90s Excesses
By Peter Eavis
Senior Columnist
2/1/01 6:16 PM ET
Most readers will have tried the hair-of-the-dog cure for a hangover at least once. But, as you will have probably discovered, drinking more only forestalls the comedown for a short while -- if at all (forgive the reference, but this is Detox ).
In exactly the same way, no matter how much liquidity the Fed injects into the economy through its emergency rate cuts, it can't prevent a deep adjustment after all the excesses of the '90s. The substance that got us high is bringing us down. This axiomatic economic rule has been bolstered by a number of recent economic releases. Yet so many economists, and even leading business publications, are locked into an outmoded Keynsian belief that the economy's fate lies in the hands of the central bank. The Wall Street Journal, of all publications, Thursday fell into that trap, with a front page story editorializing thus: "Fear of a recession can quickly bring on the real thing. 'Animal spirits,' the British economist John Maynard Keynes once wrote, can hold the key to important economic variables, such as business investment."
Warning Warning
Keynes lost his shirt investing in the stock market in the '20s and '30s, and anyone who buys stocks on the basis of a Fed-engineered economic recovery is danger of that too.
Consumer confidence is shot and factories are slowing. So here's why the elixir of easier money won't work for long.
The bad investments of the boom simply can't survive -- under any monetary climate. This means capital goods production will slump, which will smash much-loved companies like Cisco (CSCO:Nasdaq - news - boards) and Oracle (ORCL:Nasdaq - news - boards). It'll also mean layoffs, such as those recently discussed regarding GE (GE:NYSE - news - boards), and price wars as firms fight to sustain margins.
We've all seen wealth-destroying pipe dreams like priceline (PCLN:Nasdaq - news - boards) crash. But, as Detox has written before, the equity market is merely a more visible indicator of the stupid investing going on in the "real" economy. Anecdotally, we've all experienced how superfluous technology can become. Whenever Detox writes on business software firms, a flurry of email arrives saying how infuriating it is to deal with egregiously overpriced products from the supplier in question. In minutes from their Dec. 9 meeting, released Thursday, Fed governors alluded to overinvestment in IT.
The profitability of using and producing such software and equipment had been overestimated to a degree, and disappointing sales and a better appreciation of risks had resulted in much slower growth in production of such equipment and sharp deterioration in the equity prices of high-tech companies.
The impressive productivity numbers of the past five years have led most people to believe that the boom wasn't leading to poor investment choices. But Northern Trust economist Paul Kasriel published groundbreaking work this week that shows productivity numbers are slumping as the economy slows. New Economy believers have maintained that productivity will hold up in a slowdown. Based on calculations you can assess on his Web site, Kasriel says: "We can look forward to next week's productivity report showing a slowing in productivity growth to something in the neighborhood of 1-1/2% or less. How 'Old Era.' "
Unlike Diamonds
Producers' big mistake was to invest on the basis that the boom will continue forever. For a while, due to the Fed's largesse, it looked as if consumers would keep spending and providing the demand for their goods. But the consumer inevitably has to call it quits at some point and cut consumption. The adjustment is even harsher after a period of high borrowing and minuscule saving. Household borrowing has nearly doubled over the past 10 years, leaving households with over $7 trillion of debt, while the savings rate has plunged into negative territory.
The Fed calculates an average balance sheet for households. Fourth-quarter figures, not yet released, are likely to show a sizable drop in net worth as certain assets (like stocks) fall in value more quickly than liabilities (like borrowings).
And if economic uncertainty forces individuals to save more, they will necessarily cut back on current consumption and depleting demand. The dot-com economy is becoming the detox economy.
Source: TheStreet.com
***********************************************************
Ralph, ohne Kommentar