Asian economic worries battered stocks Thursday as the Dow Jones Industrial Average fell back below the 9000 mark. The industrials slid about 196 points, or 2.2%, to 8933, the third sharpest drop of the year. The Nasdaq Composite Index fell about 35 points, or 1.8%, to 1935.

For more information, see The Wall Street Journal Interactive Edition at:

http://interactive.wsj.com/edition/current/summaries/money.htm

This without the Y2K equasion, what will the scenario be in 12 months when Asia finaly relises that ther financial transactions with corporate America, Australia, and the UK depend on westenised date settings?

-- Timothy J Wilbur (timkaz@nor.com.au), July 23, 1998

Answers

May be just another dip ... may be the big one. Who knows. (We all will soon!)

The fundamental thing to know is that the USA market's on an average price/earnings ratio approaching 30. That means that for an average share, it'll take 30 years for the company to earn what you paid for the share. And that's assuming that current earnings don't get any worse. Sure, SOME companies will grow their earnings 3x and make the present rating sensible. But ALL of them?

Does this sound silly to you?

It does to me. I more-or-less cleared out of the stockmarket before the Asian crisis last year. That it's gone up since then should not have surprised me.

Get a copy of J K Galbraith's "The Great Crash 1929" if you want to understand what I think is going on. "History never repeats, but it often rhymes" (a Mark Twain quote, maybe poorly remembered). And remember, 1929 didn't need an impending Y2K or any other obvious trigger to start the collapse.

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), July 24, 1998.

I have *read* a lot about the market, and watch it daily (my wife put some money in), but have only 1-2K in there myself. Having said that, I don't expect the market to sag until either 1) a major country (or a dozen!) default on loans, with no relation to Y2K, or 2) BIG computer failures occur at the start of the new fiscal year in 1999 (April, July, Oct, etc.). Personally, I think #2, will cause #1.

The rest of the world is dumping $$$ into the US, either due to lack of profit potential, or substantial risk in their home countries. Until the whole global economy goes down, I don't see the US market taking much of a dive.

-- Anonymous (Anonymous@anonymous.com), July 24, 1998.

An interesting effect on the market that, while not directly a Y2K issue is in fact Y2K related.

Several large systems companies (Computer Associates principal among them) have already begun to warn Wall Street not to expect any significant increase in earnings until at least the second quarter of 2000. In fact, The Street has been warned to expect declining revenues due to declining sales during that period as customers hold off on new purchases and installations due to Y2K moratoriums and remediation efforts.

-- Paul Neuhardt (neuhardt@ultranet.com), July 24, 1998.

Someone said: Get a copy of J K Galbraith's "The Great Crash 1929" if you want to understand what I think is going on. I'm on a tight time schedule. Would you care to give a short synopsis of it?

I watched a video called Capital Crimes which was very informative, has anyone heard of it, and how accurate was it? Basically said the bankeers have been messing with the economies and markets for hundreds of years. Also that they planned the crash of '29 because they couldn't get their central bank. They called in loans and tightened the $ supply. I have another question...Can banks call in any loan today? I heard somewhere in the fine print of every loan contract is a statement which says the bank has the option to demand payment in full any time it so chooses. Is this true, or a rumor?

-- Kay P (Y2kay@usa.net), July 24, 1998.

Someone said: Get a copy of J K Galbraith's "The Great Crash 1929" if you want to understand what I think is going on.

I'm on a tight time schedule. Would you care to give a short synopsis of it?

I watched a video called Capital Crimes which was very informative, has anyone heard of it, and how accurate was it? Basically said the bankeers have been messing with the economies and markets for hundreds of years. Also that they planned the crash of '29 because they couldn't get their central bank. They called in loans and tightened the $ supply. I have another question...Can banks call in any loan today? I heard somewhere in the fine print of every loan contract is a statement which says the bank has the option to demand payment in full any time it so chooses. Is this true, or a rumor?

-- Kay P (Y2kay@usa.net), July 24, 1998.

Not only can they call your note (VERY rare), they have additional language in the note referred to a "right of offset." It gives them the right (in most states) to take ALL the money in your checking / savings account to satisfy the indebtedness. . . again it's rarely used.

It's a wonderful tool if one is a banker. I once had a gentleman curse me and my mother because I wanted him to repay my bank. I took all the money from his account the day after he and his wife were paid. He called me and told me I could not do "something like that." I told him to read his note, and I bid him a good day. :-) Be nice to your creditors.

-- zerad (zerad@my-dejanews.com), July 24, 1998.

I think i will go to the bank and make a little withdraw.

-- smith (gman100@webtv.net), July 25, 1998.

Synopsis of J K Galbraith's "THe Great Crash 1929": the title ought to do! It's a history of the last great financial bubble. As I quoted, "history doesn't repeat, but it often rhymes". Another quote in a similar vein is "those who do not learn from the past are doomed to repeat it". "The Great crash 1929" is not a heavyweight economic history, it's an amusing and well-paced account of those times, and it's an inexpensive paperback (about 200 pages).

So, read up about the last great boom and bust, then make your mind up as to whether its about to happen again.

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), July 27, 1998.