que seria, you are indeed touching on the question of "soft landing" vs "crash" as solutions to eliminating excess capacity, excess debt and other economic imbalances. I believe, however that "discipline" of the Austrian school suggest every so often that crashes are needed to bring about new balances. The problem with such crashes (or sudden economic dislocations) is that they are associated with major decline in world GDP, and massive declines in employment. That process not only eliminates excess capacity and debt, it eliminates jobs and causes untold misery to millions of people. IMHO, the cost of such an abrupt adjustment is too high, and long term we end up with a lower standard of living than the approach of "soft landing" and modest yearly inflation (an excellent debt abatement tool). The real PPT is there to avoid financial sudden crashes (that risk bringing with them economic crashes) and so far I count about four to five occasions when they intervened (if we count Oct 87 as one), the Asian malaise, the LTCM episode and Russian collapse, and of course the 9/11. Other bear market rallies (May 2000, April 2001 and July/October 2002), I believe were due to internal excess pessimism in the markets which brought about selling exhaustion. One reason I do not believe that we are going much higher here is that since the July/October selling exhaustion, we have not had a period of excess pessimism, but surely have and are having excess optimism. Now, excess optimism in a bull market is the norm, but bull markets rapidly develop leadership which right now is extremely narrow.
Zeev
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