Re Allin's [5386]: > What bubble? I'm teaching econometrics this > semester, and to illustrate the "error correction" > model specification I ran an error > correction model of the Dow-Jones average, > using quarterly data, 1959-2000. <snip, JL> 1. If one is looking for bubbles and/or non- bubbles, shouldn't one also look at the NASDAQ? One of the interesting trends in the recent past is how the DJIA and NASDAQ can move in different directions and at significantly different rates. Furthermore, since some have referred to this as the "Internet bubble", an examination of NASDAQ data seems particularly relevant. 2. What about other bubbles? E.g. do you agree with Steve K that there seems to be a significant bubble (still) in the housing and real estate market? This "bubble" also has significance because if and/or when it bursts, it can signal a decrease in new housing construction -- often itself a signal for a national recession. 3. What about the effects of foreign markets on the U.S. stock markets and the U.S. economy? No less an authority than the ever loquacious J. Barkley Rosser Jr., in a post for the PKT list dated 4/20, noted a recent article by Robert Samuelson in the _Washington Post_ about Argentina's massive foreign exchange and debt crisis and how (to quote Barkley) "a bellyup in Argentina could trigger a full scale global financial collapse." Interestingly, this claim by Samuelson and Rosser didn't seem to stir up any further discussion on PKT. What I think this demonstrates is just how volatile the current situation is. It's almost as if everyone knows that the bubble(s) will burst, but they don't know when or what the event will be that will be the prick that will trigger the bubble's collapse. 4. What's been happening recently in the market for government bonds? It seems to me that a lot of investors are switching from stocks to government bonds. In so doing, I think that they are anticipating a collapse of the stock markets and are thus looking for less risky investments. Yet, as more money is taken out of the stock markets and invested in the bonds market, doesn't this reinforce the downward pressure on the stock market? In solidarity, Jerry
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