Wednesday, February 28, 2007
The big news is yesterday's big drop in the U.S. stock markets, following the big drop in the Chinese markets. There are too many stories and too many different angles to report in detail, but here are the major themes (as of now): First, the Chinese markets are the wild west right now, topping even the US in the 1999-2000 era in irrational exuberance. Stock traders there are not investors, they are speculators who view stocktrading as gambling and do so with very little information. Second, recession fears are growing in the US, driven largely by the drop in durable goods orders and Alan Greenspan's warning of a recession, and also the continuing reports about the problems in the home mortgage market. We will have to see how all this plays out.