New Jersey Governor Corzine left hospital today, in a 6-vehicle motorcade. As reported by the NYT, cruising at 70 in a 55 zone. I suppose that is better than the 91 that contributed to his recent injuries. But it would be nice if these aristocrats would at least show some sign of observing the limits they impose on the peasantry? Why does he need a 6-car motorcade, anyway? Can’t his wife drive him home?

A comment on Bill Fleckenstein’s site: “This is only the third time in the 110-year history of the Dow that it has closed in positive territory for 19 of the last 21 trading days. Can you guess when the last time was? Summer of 1929…”

Month-end summary will be delayed because my Quicken has stopped working. I upgraded from Ubuntu 6.10 to the newly released 7.04. Something made Quicken unhappy so I am hoping for a fix. I could go back to Win2K to run Quicken but that would be a lot of work to bring my Windows data files up to date.

It’s not just me, many others are reporting the same problem so hopefully it will get fixed quickly. Fingers crossed.

SINGAPORE (Reuters) - Morgan Stanley former star economist Andy Xie warned of an imminent stock market crash in China — but still hopes to raise money to invest in the country.

Xie, who attracted a wide following while he was at Morgan Stanley because of his often contrarian views on China’s economy and stock markets, also warned that the global boom in equities would be over by 2008 and that this would coincide with a worldwide recession.

The recession would start from the United States and spiral down into Asia where exporters would be hit, Xie, 46, told Reuters in a telephone interview.

“I think it’s going to be bust very soon,” Xie said, adding that a combination of excess liquidity, rising inflation and rich valuations would result in a global crash soon.

“People will be surprised. When the end comes, it’s going to be pretty bad,” Xie added.

….

Xie said the Chinese government understood the importance of limiting the bubble in the market, but was reluctant to implement more forceful measures, fearing a political backlash.

“College students are putting their tuition money into the market…stroke-stricken retirees get wheeled into branches of securities firms to trade,” Xie said in his SCMP article.

“People are not paying attention to anything else,” Xie told Reuters.

James’ comment mentioned Jeremy Grantham’s comments. I had read excerpts, but not the complete letter, which is on the GMO site. It is worth, for the record, posting Jeremy’s summary:

“1. Global fundamental economic conditions are nearly perfect and have been for some time.

2. Availability of global credit is generous and cheap and has been for some time.

3. Animal spirits and optimism are therefore high and feed on themselves through reinforcing results and through being universally shared.

4. All global assets reflect this and are overpriced and show, probably for the first time, a negative return to risk taking.

5. The correlation in global economic fundamentals is at a new high, reflected in the steadily increasing correlation in asset price movements.

6. Global credit is more extended and more complicated than ever before so that no one is sure where all the increased risk has ended up.

7. Every bubble has always burst.

8. The bursting of the bubble will be across all countries and all assets, with the probable exception of high grade bonds. Risk premiums in particular will widen. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity.

9. Naturally the Fed and Fed equivalents overseas will move to contain the economic damage as the Fed did last time after the 2000 break. But the heart of the last bubble, the NASDAQ and internet stocks, still declined by almost 80% and 90%, respectively. (The heart of the bubble this time is probably private equity. In 10 years, it may well be described as the private equity bubble just as 2000 is thought of as the internet bubble. You heard it here first!)

10. What is wrong with this logic? Something I hope.

11. Of course the tricky bit, as always, is timing. Most bubbles, like internet stocks and Japanese land, go through an exponential phase before breaking, usually short in time but dramatic in extent. My colleagues have registered the series of declines and are beginning to suggest that this global bubble has not yet had this phase and perhaps they are right. (A surge in money flowing into private equity might cause just such a hyperbolic phase.) In which case, pessimists or conservatives will take considerably more pain. Again?!

…. Given all the uncertainties and the fact that conditions do not weaken linearly but in uneven and unpredictable steps, is it any surprise that we always miss market tops?”