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Monday, February 07, 2005


the coming crash

brad delong turns the president's pitch for social security into the economic case for a stock market crash.

The fact that economists are forced to choose from among these three options--for there is no fourth way out--has interesting implications for Council of Economic Advisors, "Three Questions About Social Security," February 4, 2005. That memo denies that the equity premium has fallen. It denies that future growth will be fast. And so we have the CEA forecasting a stock market crash.
what the numbers spit out to -- a two-thirds decline in the market to a p/d ratio near 20 -- is just what market oldsters like richard russell, sir john templeton and walter rouleau have been forecasting since the late 1990s. it seems very few people really understand long-term market dynamics and how the market is destined to revert to the mean.

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