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  • From: "Don Bowen" <don.bowen AT earthlink.net>
  • To: <homestead AT lists.ibiblio.org>
  • Subject: Re: [Homestead] Dow could close below 8000
  • Date: Fri, 10 Oct 2008 14:58:08 -0400

Stock gains ans losses is an issue that few understand. Sure you see what
was over 14,000 a year ago is not under 8000 but what does it mean?

Same with the housing bubble. I know some do not like the term bubble but
it is a common term for Asset Price Inflation that dates from the 1700s and
the Mississippian land bubble. Bubbles are created by cheap money,
excessive credit, a mania to get in on a good deal. Bubbles are stopped by
some sort of shock, this time the realization that no one could afford it
aided by the oil price shock of Peak Oil. The shock pricks the bubble which
leads to a panic to get out before losses are realized. In housing the
interest resets were part of the prick. The panic to get out of the market
often leads to a crash which is where we are now.

These events are only aided but not caused by a particular political
philosophy. An administration can help inflate a bubble by easing credit
and regulations but they are difficult to control and with a global economy
we are seeing more now than at any time in History.

Don Bowen KI6DIU
http://www.braingarage.com/Dons/Travels/journal/Journal.html






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