Re: Monday Opening

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

That is the consensus of the market establishment.  It is not merely sentiment.
The Fed can only provide liquidity. Whether liquidity can support equity prices
depends on the market's liquidity preference, as Paul Davidson tirelessly
reminds us.  There is a high prospect that the Fed's actions to increase the
money supply (by buying $38 billion of treasuries) will be neutralized by the
sharp drop in money velocity.

If the world's hedge funds are permitted a free hand, the markets on Monday may
crash in earnest through a downward spiral initiated by combination shorts on
the Dow and the dollar with notional values that can be astronomical.  There is
no much the Fed can do to "clean" that up.

I respect, nevertheless, your right participate in the market the way you see
fit.
The SEC however, has to walk a very fine line to protect the investing public
who may be helpless and defenseless against market manipulation.  The
manipulative destruction of asset value held by a trusting public is not much
different than the physical destruction of property and innocent lives.  It is a
form of financial terrorism. The SEC has up to now shared your view when the
destruction occurred beyond the borders of the US.  At long last, it is
beginning to develop a more balanced view.

Henry


Sean Reilly wrote:

> "Hedge funds are cautioned not to profit from the situation, an attitude
> very different from when Soros broke the Bank of England."
>
> Why shouldn't they. Given that there would be no laws that they would be
> breaking, If I were operating a hedge fund, then I would take full advantage
> of the moment.
>
> Besides the Fed is there to clean up the mess.
>
> ----- Original Message -----
> From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
> To: <pkt@xxxxxxxxxxxxxxxx>; <gang8@xxxxxxxxxxxxxxx>;
> <lwside1@xxxxxxxxxxxxxxx>
> Sent: Friday, September 14, 2001 9:54 AM
> Subject: Monday Opening
>
> > The markets will open next Monday. The word is out that there is a
> > gentleman's not to short the market.  This is admirable as a sentiment
> > of solidarity in times of stress.  Yet a higher principle is involved:
> > that of market fundamentalism, the inviolable principle of
> > neo-liberalism.  This principle has been deemed inviolable when emerging
> > markets collapsed with widespread human sufferings.  The question needs
> > to be raised whether faith in the free markets' ability to handle shock
> > is justified, whether collective manipulation in the form of artificial
> > price support can be justified under any circumstance.  Economic data
> > collected immediately before the tragedy continue to be disappointed,
> > from unemployment to capacity utilization.  Hedge funds are cautioned
> > not to profit from the situation, an attitude very different from when
> > Soros broke the Bank of England.
> >
> > Some visible impacts are beginning to be discernible.  The Manhattan
> > real estate market has lost millions of square feet, resulting in a
> > sudden shortage of first class office space.  Major firms are already
> > signing long leases in New Jersey and Connecticut. This will give
> > further impetus to electronic markets which has been growing despite
> > resistance from traditional practice.
> >
> > The political pressure on the government to tighten security is
> > producing distortions.  Yesterdays snafu on renewed airports closing in
> > NY is revealing.  Legitimate passengers and pilots with suspicious
> > circumstantial traits that set off alarms were detained and airports
> > were categorically closed.  As experts know, it is almost impossible to
> > screen well trained terrorists.   To placate public concern, procedures
> > are now in place to give the public assurance by creating a superficial
> > image of safety through inconvenience.  Air travel now is expected to
> > add three more hours to all flights.  That means a trip from New York to
> > California will now take over 8 hours.  The economic cost of this is
> > very high.
> >
> > Congress has promised $40 billion to help NY recover.  It would be
> > interesting to see how this money is distributed and how the
> > beneficiaries are selected.   In a way, the whole nation has been
> > victimized.  There is also talk of tax relief for the survivors and the
> > estates of victims.  Supplyside sentiments are on the defensive.
> >
> > Interesting observation:  even in Manhattan the mood varies greatly from
> > district to district.  The further north it gets from the WTC, the more
> > normal life appears.  On Tuesday afternoon, the chic sidewalk
> > restaurants on Madison Avenue and the mid 60s were full of the usual
> > "beautiful" people, while the column of smoke downtown was clearly
> > visible.  By Thursday afternoon, much of the city north of 14th Street
> > were operating normally except the traffic was unusually light.
> >
> > Henry C.K. Liu
> >
> >