More on the french announcement yesterday 17th
Sent to subscribers - October 19th, 2001

The French government was forced yesterday to bow to market pressure regarding tech infrastructure listed companies and slash the asking price for G3 spectrum. More important though, they extended the ownership rights to 20 years, was 15. That's important, it is the same as what used to happen in the time of the railroads and land grants; the rail companies made far more profits collecting the land rent from land given to them for free by the govt, than actually carrying passengers or freight.

The move is also akin to what banks have to do in land induced recessions, write off the value of the bad loans (credit created), loans made mostly against land value that ends up lower than the value of the outstanding loan. Once again such bank action usually is picked up by the markets as a positive sign and usually marks one of the low points of the recession.

Governments rarely give in until the last moment, same for banks - but I am having trouble seeing the market as having bottomed yet when the S&P 500 yesterday hit a p/e of 36; a record high. The market has never in its history been this expensive. Now either companies have to increase earnings to match the expectations, or the market price has to fall. (Or coy profits are being falsely reported on the high side, making comparisons to earlier years meaningless.)

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