It's official. The New York Times, on Saturday 2-12-00, declared the American Stock Market in "correction" mode. A day earlier a bomb exploded outside Wall Street, with more explosions, both economic and terrorist, on the way. From a peek of 11,723 on January 14th, the general direction has been down, slightly over 11%, 11.1% to be precise. The actual Dow graph resembles what a Clinton, either one, lie detector chart would look like. The New York Times also ominously informs us this is the fastest drop in my lifetime, over 45 years.

The stock market crowd, greedy, arrogant, preening peacocks that they are, don't seem to understand what has happened. Watching the bow tied, economic bull, pundit brigade on business television, you'd think their bow ties had suddenly become boa constrictors. It's hard to explain an 11% drop in twenty trading days. The oft repeated mantra of "buying opportunity" sounds more strained this time around. Me thinks the bulls are starting to worry about becoming the other type of bull- the one called the Wall Street Steer.

It's true Wall Street has been here before. Up to now, the individual investor gleefully storms in and sucks up bargains with the passion of an elephant at a waterhole during an African drought. Not this time. While the fantasy valuations, outrageous Price to Earnings ratios, and the narrowness of the advance remains, there is something else we've seen before. By the way, if you look outside the thirty stocks which comprise the DOW, and the big ten which rule the NASDAQ, the carnage is very visible.

The last time we saw the current stock market situation was fall 1987. Then, we had a scandal plagued, lame duck President Reagan. Now we have a scandal plagued, lame duck President Clinton. Then we interest rates on the way up. Now we also have interest rates on the way up. The combination of rising interest rates and political impotence has always proved lethal to the American Stock Market. Interest rates are definitely on the way up. No doubt about that at all. They will be for the foreseeable future. Alan the magician has created a stock market bubble of historic proportions. It no longer matters if the rest of the world's economies get into trouble- the FED is unable to lower interest rates to help. Japan in particular, forever in recession/depression, without actually collapsing, is now teetering on the edge again. The FED will be unable to respond effectively since global debt levels are mind boggling. The FED must protect the fiat dollar at all costs, or else the jig is up. Why do you think the Republocrats are pushing personal bankruptcy reform? They, the banks and the system realize what is coming. Pushing on the credit/debt string this time around won't work anymore. Dare I mention gold?

It's interesting what gold hasn't done since January first. Remember the breathless predictions that gold and silver prices would collapse? Funny, things haven't quite worked out that way. The inflation fire is spreading. It rages unchecked in fuel oil prices for instance. Remember the huge promised Y2K stockpiles? Well then why the massive price increases in fuel and heating oil? Unconfirmed reports hint of serious oil field disruptions overseas. The only objective facts are the price increases. Looks like this doomer might not spend the next few months holed up in his bunker after all. As soon as people realize the inflation numbers are real, the attitude will shift rapidly.

The usual tricks won't work this time around, especially in regards to gold and silver prices. In an increasing inflation, increasing interest rate environment, the exact opposite of the Clintonista's reign of terror, gold and silver will resume their historic role. Gold and silver will do just fine thank you. All this CNBC pundit prattle justifying ludicrous stock valuations and saying P ; E ratios don't matter, will be shown for the crap it is. If you want to value these Internet stocks at hundreds of times over meager, or even no earnings, fine. Just be prepared. As the recent cyber attacks show, there are snipers on the Yellow Brick Road to Internet Oz. When I get a reasonable answer to this question, I will believe the stock market isn't poised for a crash of historic proportions. Why is a company like Amazon.com, which has never made a dime, valued so highly? This question will sink the market in the new high interest rate, high inflation environment. The economic context of Y2K is staggering debt loads that are increasingly difficult to pay off. The goal of any company will be to increase cash flow in an inflationary environment. This is precisely the environment where gold and silver will thrive.