From: John Conover <john@email.johncon.com>
Subject: Re: Harsh New Bankruptcy Laws followed immediately by Market Crash.
Date: 18 Mar 2001 23:00:14 GMT
Yea, it is going to hurt the middle class.
Corporate stocks available in the retail equity markets constitutes
only a fraction, (about 15%-25%,) of the total stocks-the rest are
held by long term institutional investors, the employees/founders, or
tied up in employee incentive options, (roughly, in that order.)
A lot of the institutional investment has been with the various
companies since their founding, and was purchased at prices near
initial valuation of the company, so still has very respectable ROI in
dividends for the long term institutional investors-even after the
deterioration in the market.
The folks that speculated on margin in the retail equity market's
"bubble" of the last decade without hedging their bets might have been
a little naive-its not that the "tulip effect" was unknown;
descriptions are all over the Internet. A. Greenspan's term
"irrational exuberance," which he mentioned on several occasions, is
probably fitting.
However, the price of the piper of nativity will probably be some
asset devaluation, which will hurt the middle class. (Probably
starting with high end personal properties.)
John
BTW, as you will recall, over the past few years, there have been a
lot of articles posted to sci.econ, etc., asking whether the stock
market will go up forever, (which it didn't,) or about the new
economy, (which it wasn't,) or whether stock prices were a zero sum
game in a bubble, (which they, apparently, are.)
Remember the intensity of the arguments?
Almost religious dogma.
One would think we would have learned after seven millennia of
speculative "bubbles," but wait about 20 years, and the grand pyramid
scheme of speculative investing will create another "bubble" and
educate another generation.
Greed's funny, isn't?
Dick Eastman writes:
> The people who own the people who run the U.S.
> do not wait for markets to pull surprises. These
> people are billionaires and accountable only to their
> own.
>
> Yes, the crash seemed to wait until after the
> election.
>
> But , also the crash occured within one week of
> new harsh bankruptcy legislation.
>
> When a the stock market crashes it is a disaster for
> those caught unaware. Their fate is often bankruptcy.
> But in an economic disaster assets are not destroyed,
> they merely change hands. Now with the new
> bankruptcy laws the cost of stock market crashes to
> the creditor class is greatly reduced. Now they
> can rest assured that the flow of assets, in this
> middle-class disaster, will be into their portfolios.
>
> And no one knows who shorted the market early
> last week. Or which brokerage house put in the first
> margin calls.
>
> You can always tell who is controlling a country by
> finding out whose business is least regulated and
> least monitored. Those who lend money to governments
> are not regulated at all.
>
> Dick Eastman
> Yakima
> U.S.A.
> Every man is responsible to every other man.
>
>
--
John Conover, john@email.johncon.com, http://www.johncon.com/