On the edge of a precipice

The Guardian ^ | July 17, 2002 | Larry Elliott, economics editor

[VadeRetro]

I could start to think about buying, with this kind of article around. Only problem is, I'd have to risk a shrinking supply of money. Still, when you smell fear is the time to back the truck up to the loading dock.

[gcruse]

I've been thinking the same thing.

[SamAdams76]

The "Day-Trader" mentality is what got us into this mess. Yuppies checking their stocks every five minutes on their Palm Pilot while sipping cappuccino at Starbucks, like they were Gordon freaking Gekko, make me ill. I'm actually glad that self-absorbed era is now over and that the nation can get back to real work.

BTW, I'm not against investing in the stock market. I've been investing monthly since 1982. But I buy my stocks for the long haul. I haven't sold a single share in 20 years and I probably won't for another 15-20. I'm in for the long haul and see the current bear market as an opportunity to obtain more shares for my modest monthly contributions. And if I lose it all, what the heck. I would have blown it all on beer and pizza anyhow (and I still get plenty of that).

[nygoose]

http://home.flash.net/~rhmjr/index.html

[eno_]

Me too, but I'll wait till a couple more accounting scandals hit and then we bomb Iraq. Only the strong will buy then.

[Lazamataz]

While the author is spot-on that stock prices need to come down dramatically, I think he is very wrong about thinking we will become the next Japan. Japan has very limited resources, nearly no physical room for growth, and very little immigration. (Believe it or not, immigration -- hated by Paleo-conservatives and Buchananites alike -- fuels great growth in an economy) Additionally, we do not have nearly the level of socialistic interference in our corporations as Japan does, although in this regard we seem to be striving for parity.

The best things we can do to reinvigorate the economy are to A) Lower taxes where possible, B) Shrink government ruthlessly, C) Sell or give federal land to private citizens.

[eno_]

Also the commercial real estate market in Japan was a big part of the bubble and a cause of great pain to Japanese banks. Commercial real estate in the U.S. takes its knocks and gets up to do it again. I AM a bit worried that the GSEs are the next big disaster. But that don't make us Japan.

Does anyone know how the indexes are relative to long-term trends. I was never a chartist, and I'm sure this measurement isn't simple (PE ratios will still suck when we hit bottom, for example) but would like to take a shot at figuring out if we have crossed below the trend line.

[PJ-Comix]

I still remember all those Japanese tourists swarming L.A. when the economy over there was still good. One day I was walking past Lawry's Prime Beef restaurant on the corner of La Cienega and Wilshire when a Japanese guy holding an aluminum foil bag came walking out of there and up to me with a very puzzled look on his face.

"Waffo doggee bak?" he asked me.

"Huh?" I replied.

"Waffo doggee bak?" he repeated.

Then it sunk in. He was referring to the bag he was holding and he was asking me what a doggy bag was for. Obviously they ordered way more Prime Rib than they could eat and the restaurant gave him and his colleagues doggy bags to take the prime rib home. A light went on in my head and I bowed elaborately to the Japanese and gave this response:

"Ah so! Ancient American custom. They give you doggy bags and then you give to first person you meet."

I held my hands out and the Japanese enthusiastically deposited their doggy bags into my greedy hands.

"Ah! Tank you berry much," they exclaimed in gratitude for the honor I bestowed upon them for allowing them to give me their doggy bags.

I then quickly proceeded home and had the best Prime Rib dinner (with lots leftover for the next day) that I ever ate.

[VadeRetro]

I've been thinking the same thing.

It's called contrarianism, and there are books on the subject. The underlying truth is that there's no money in going with the crowd. The idea is "Buy low, sell high" and that means you have to be moving against the crowd both ways, buy and sell.

But here's a caveat. It can take those 60 million Frenchmen a long time to be wrong. Everyone was real optimistic around 1994 when the DOW was around 4500 and seemed to be heading even higher. I got "smart" because everyone else was leaning the other way and moved heavily out of stocks. So the DOW goes on to about 10,000, even with Clinton in the WH. I could have used staying in for most of that.

It doesn't take a rocket scientist to see how the same thing can happen on the down side. (Except there's a floor at zero.)

[Lazamataz]

Your mistake was not to charge them $20.00 each, the customary American Doggie Tip. ;^)

Funny story!

[monkeyshine]

Beer and pizza ain't a bad investment. You can return the empty beer bottles and actually get a dividend! No dotbomb ever paid a dividend.

[PJ-Comix]

Better for them to give me their Prime Rib than to dogs which they didn't own. Somehow the concept of what the purpose of doggy bags are really for is much more difficult for them to understand than the explanation I gave. Oh, and they bowed when they handed me the bags.

p.s. I'm watching Pearl Harbor on cable right now. According to this flick, the whole purpose of the Japanese attack on Pearl Harbor was so Ben Affleck could eventually get to boink Kate Beckinsale.

[Lazamataz]

LOL! Yer on a roll tonight, brother PJ! :o)

[PJ-Comix]

The problem with the Japanese economy is that stuff isn't made there anymore. Right after the war, the Japanese made tons of cheap little products that were exported to the USA. "Made In Japan" back then meant "Cheap Product." Then the Japanese upgraded and exported high quality electronic products and cars---TVs, VCRs, radios, Toyota's, etc.. Meanwhile the Koreans and the Taiwanese sold up the cheap products that the Japanese used to. Then the Koreans and the Tawainese started selling us all those electronic products and the Japanese had no where else to go. Oh, and the mainland Chinese are selling us the cheap little products that the Japanese used to. However, I expect the mainland Chinese to eventually upgrade to fancier electronic products and computers. Maybe the Japanese will have to go back to producing those cheap little products again.

All I know is that I rarely see products anymore that say "Made In Japan."

[Mike Darancette]

The "Day-Trader" mentality is what got us into this mess. "Yuppies checking their stocks every five minutes on their Palm Pilot while sipping cappuccino at Starbucks, like they were Gordon freaking Gekko, make me ill. I'm actually glad that self-absorbed era is now over and that the nation can get back to real work.

That and the worthless B2B .com companies that the venture capitalists and the investment houses conjured up, took public and raped for their assets.

There were many people like Terry McAliff who used other connected cronies to turn thousands into millions at the expense of the little investors and 401Ks that followed.

Even Greenspan had to admit to the gross excess of the late 90s.

[gabby hayes]

No money shortage problem with the PPT close at hand. The wiz just has to be careful with security surrounding the Oz shroud.

[PJ-Comix]

BTW, I used to think the only part of Pearl Harbor movie worth watching was the Japanese Attack. But after re-watching it a few times it strikes me how phony it looks with all that computerized air attacks and explosions. Tora! Tora! Tora! was a much better movie and we didn't have to agonize over whether some character got his rocks off by a bimbo nurse. Tora! Tora! Tora! was focused primarily on the Pearl Harbor attack.

[Clinging Bitterly]

> A) Lower taxes where possible, B) Shrink government ruthlessly, C) Sell or give federal land to private citizens.

Pretty much spot on I'd say.

Now this Eliott guy I don't understand - put the brakes on capitalism?? Isn't capitalism the driving force of our being where we are, the global superpower, high standard of living, and so forth?

But hey if all the money disappeared tomorrow, our abundant natural resources are as good as gold - the US would still eat well - that's more important than solvent banks.

The strategery is simple - people with land and guns will not starve.

Not sure how the UK would fare in that regard.

Dave in Eugene

[Lurker]

Good plan.

L