I believe the article attached below should be interest to those of you who take interest in the economy. The main thing to note here is that, once again, the economists, and others who should be in the know, in general have been caught off-guard...things are slowing down faster and more rapidly than most imagined it could. The Fed is likely to move too slowly, but they must, due to the nature of their work. In the meantime, we will likely not be able to get out of our predicaments without more suffering down the road.... The stubborn bullishness of most investors indicates that we still have room to fall further (see previous article I mailed out); so no one can intelligently tell where a bottom might be at this point.

Also note how much the global economy depends upon the economic health of America. The more observant economically-minded folk know that the world cannot continue to rest on America's shoulders forever. Makes you wonder about international diversification....

Finally, Japan will be hurt most as some are predicting its 10-year recession will finally tumble into depression. (Note how no one holds up Japanese industry as a model for anything positive any more like in the 80s?!?!). SE Asia is showing signs of trouble all over again. A big question we should be asking ourselves is whether our recent bubble is similar to the bubble Japan had before its current extended recession.

Before I am called a bear, note that despite my sour outlook on the near-term, I think we can still get through this in decent shape, IF, and this is a big IF, the economic leaders in power recognize what is really going on here and act in a coordinated, rapid fashion. They need to take some of the bad possibilities and scenarios seriously. Without this, look out below!

Another sign to look out for is increased calls by the public and political leaders to make radical changes to the way economic mareketplaces currently work and operate that show distrust in markets. The growing energy crisis in California is one example of what is to come as people put the workings of the global capitalist system under a microscope. The political transition in Washington, DC at such a "critical juncture" could also give us reason to pause!

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December 21, 2000

Page One Feature

Increasing Ties Across World Markets Show Slowdown Is Global in Nature

By STEVE LIESMAN, CHRISTOPHER RHOADS and ROBERT FRANK

Staff Reporters of THE WALL STREET JOURNAL

http://interactive.wsj.com/archive/retrieve.cgi?id=SB977348055437916304.djm