[PEN-L:338] Re: Re: Cyber-Sawicky

[Doug Henwood <dhenwood@xxxxxxxxx>]

Tom Walker wrote:

>My crude hypothesis, which I divulged to Max and to Doug Henwood back in
>August, is that the recently deceased stock market bubble of the mid-1990s
>could be explained by a demographic anomoly which saw a substantial increase
>in the working force population at peak earning (and retirement saving) age
>and a considerable (short-lived) decline in the rate at which people were
>reaching retirement age. In other words, there was an anomolous short term
>bulge in the amount of new money coming into the markets.

The only problem with this thesis, Tom, is that U.S. savings rates have
declined throughout the stock boom, with 98Q2 setting a post-Depression low
of well under 1%, and the new money coming into the market was almost
entirely the result of portfolio shifts out of banks and into mutual funds.


Doug