Replies to post #73850 on Biotech Values

[corpstrat]

<<the world just might say NO!>>

I wish it'd hurry up. My pounds and euros are looking pretty measly in dollar terms. You guys should read Krugman's blog. He's one of the few with a tentative grasp on the macroeconomic phenomenon we're dealing with and he's pointing out that all this Hooverite angst about not being able to borrow has failed to cause a blip in Treasury interest rates or the dollar.

Anyway, the Fed can do quantitative easing and buy up all the debt the Treasury wants to sell. Massive amounts of credit were created from thin air in the past decade and are now being uncreated as the shadow system melts down. Le tthe Fed pump it back up to cover our deficit stimulus spending. You only have to worry about credit creation when the real economy overheats, which is exactly the opposite of our current problem.

[tony111]

The rest of the world have no choice but to buy US treasurey. The economy is so interconnected that if US fails the whole world fails. In fact, the rest of the world is relying on US to pull the world out of slump. I wonder how many EU banks will have to be nationalized if AIG was allowed to fail. It is ridiculous that EU is sidelining and hoping US effort will be sufficient to jump start the economy. When are they going to have a 800B stimulus plan themselves?

[tinkershaw]

<<<Considering the world wide situation right now do you foresee any ramifications when our government tries to borrow around $3 to $5 Trillion dollars of the next two years?

Interest, Inflation, Weak Currency are all possible problems. Also keep in mind the world just might say NO!>>.

I did write a big long and detailed response, but thought this not the forum. Suffice to say, there is some big problems here. The good side is all that money has to go somewhere, and right now it is going under the pillow. It comes out from under the pillow, and boooommmm! Perhaps like 1999/2000 again if we ever get our optimism back.

When this is done however I anticipate, for a variety of factors, a 20% reduction in our real standards of living after the devaluation of our currency, the flight of capital to more tax friendly, entrepreneurial friendly venues, and the higher cost of energy due to carbon tax issues, and unemployment that is stuck back in the levels of 6-8% in perpetuity. I remember that full employment in the mid-80s was considered to be 6%, now we consider 6% unemployment to be very high unemployment. Not anymore. And the risk of stagflation...if one is to follow the fiscal and tax policies of the 1970s, one can expect a return to the 1970s. If the rest of the world won't buy our debt, we will monetize our debt. We print the money anyways.

Also, one has to wonder how stupid it is to spend so much money so inefficiently. Not one person can make the argument that this money will have any measure of economic efficiency behind it. And there is certainly no incentive in this money to cause private enterprise to increase their efficiency.

Anyways, don't want to go too long on this topic on this forum.

Regardless, biotechs, if they get their drugs approved, are still one of the few investment vehicles that can still be a systematic homerun in this environment. Know the drugs you are buying, wait for the huge volatility to kill the stock, load up, ride the waves of volatility, sell when all the good news is priced in. Still gotta pay for drugs, well, urgghh, unless the FDA continues its present stance of no drug is ever too safe or efficacious enough stance. Then we can also see the center of drug creation in the world move to Europe and Asia (if that is not already happening).

Tinker