Monday, September 24, 2007


As ever, Mark Hulbert's been scanning the newsletters for opinions on what's up with the market. There are those, he says, who see parallels with the August 1998 implosion of the Russian debt markets which brought low Long-Term Capital Management and (let us not forget) almost nailed DE Shaw and thereby the BofA-Nationsbank merger. Coming out of that, the markets had their big run-ups to the spring 2000 booyah peaks.

I'm reminded of 1998 in a different way. When the Russian debt markets blew up, there was a massive devaluation of the ruble, which made it hard for Russians to keep snapping up all the imports they had been favoring. This meant that the final years of Yeltsin's administration bolstered Russia's declining industrial base and laid the groundwork for a redevelopment of payrolls and confidence under Putin. Could a similar fate await Detroit and the rest of the industrial heartland as the dollar continues its slide? Will Bentonville look to Biloxi rather than Beijing for extruded goods?

If it works, there's a good chance a Democrat could ride a neo-populist wave. Perhaps a $400 wave.

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