Biggs on Finance, Economics, and the Stock Market: Barton's Market Chronicles from the Morgan Stanley Years

Section 1D: Wars and Rumors of War

The Last Supper

January 21, 1980

With the bond market in disarray, questions arising about the restrictiveness of Fed policy, and with market analyst John Mendelson maximum bearish from a technical viewpoint, the stock market's rally is at a crossroads. If the market reacts in its usual way to higher interest rates, prices should fade. But if the market is now being driven by the “profitable stagflation,” store-of-value psychology I discussed last week, then prices could work higher, confounding those who think the market pattern doesn't change. My guess continues to be that prices are going higher.

Meanwhile, a bizarre story that is making the rounds in London and the Middle East, if true, could explain the crude brutality of Russia's sudden move into Afghanistan. One of the sources of this tale is the same one that accurately described to us the dimensions of the attack before the true story appeared in the Western press. Anyway, it is known that in early December the Russians sent Lieutenant-General Victor Paputin to Kabul. Paputin, age 52, was first deputy chief of the Ministry of Internal Affairs and a candidate member of the Central Committee of the Communist Party. He was considered a real star by the Politburo and was Russia's premier political-secret police operative, which means he was their main man when high-level arm twisting (and ...