Posted on Long Waves

  1. 5,447 Posts.
    Treasury Secretary Paul O'Neil finds the market declines "inexplicable".
    When top officials like this cannot see the nose in front of their faces
    we know the ubiquitousness of denial. It also portends, as mentioned in
    my last post, an incredibly long-winded, slow bear market. When an S&P
    decline of 40% and a Nasdaq decline of 73% due to causes abundantly
    available to the mind of Mr. O'Neil cease to be explicable, how can
    we hope to educate the general public?

    Recent absurdities were the "positive" earnings announcements of Yahoo
    and Microsoft. Yahoo's one-penny above estimates announcement to a
    whopping three cents per quarter puts their current P/E at 100 -- clearly
    a value stock (sic). At 10 times sales, what a bargain! Microsoft at
    5 times book, 10 times sales, and 46 times earnings is a similar
    "bargain". Jump aboard!!!

    Jumping now to a more serious mindset, the obvious problem is that public
    officials, brokerage house pundits, and every member of this bulletin board
    have, in fact, always known the truth of gross overvaluation, even without
    the corruption kicker. The problem is that now that public participation
    in the stock market extends to about three-fifths of households, further
    corruption becomes a necessity because the truth would surely usher in a
    full scale panic. After all, lying is a form of corruption -- especially
    when it promises to make the wealth distribution even more skewed. What
    better example of the truth of this assertion do we need than Greenspan
    who holds virtually no stocks at all -- proof of his real belief in the
    state of things.

    Since there are assuredly people who think like me in the public domain,
    one can expect that the next year is going to feature a titanic public
    relations battle between the cassandras trying to expose the truth about
    the stock market (and other markets) and self-serving pundits and government
    officials trying to keep it all together with chewing gum and bailing wire.
    The "all-in" public will play a game of chicken with themselves and their
    neighbors to see who blinks first.

    John Perry

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