<!DOCTYPE HTML PUBLIC "-//W3C//DTD W3 HTML//EN"> <HTML> <HEAD> <META content=text/html;charset=iso-8859-1 http-equiv=Content-Type> <META content='"MSHTML 4.71.1712.3"' name=GENERATOR> </HEAD> <BODY bgColor=#ffffff> <DIV><FONT color=#000000 size=2>The subtitle to the piece is "Last week's stock-market shudder came as welcome news to Alan Greenspan, but the Fed chairman is still struggling to avoid another 1929."</FONT></DIV> <DIV><FONT color=#000000 size=2></FONT> </DIV> <DIV><FONT color=#000000 size=2>Cassidy seems to be a Keynesian. Although sentences like "After eleven years on the job, the Fed chairman is almost universally lauded for his stewartship of the American economy, and that praise is not undeserved" make me wonder what he's up to.</FONT></DIV> <DIV><FONT color=#000000 size=2></FONT> </DIV> <DIV><FONT color=#000000 size=2>Cassidy thinks the paralles between today and 1929 are "striking." Even Milton Friedman agrees: "If anything, I suspect there is more of a bubble in today's market than there was in 1929." The main difference being the amount of margin debt. 20% then versus 1% now, largely a result of New Deal reforms. But, Cassidy suggests, there wasn't much leverage in '87 either. "Various institutional reforms have been introduced since 1987, but it isn't clear what impact they would have amid large-scale panic selling." If the market crashes, Cassidy hopes the Fed will do what it did in '87. "After the Dow fell by 508 points on October 19, 1987, the Fed flooded the financial markets with money, and this injection of liquidity prevented a major collapse. The economy stalled slightly, but didn't go into recession."</FONT></DIV> <DIV><FONT color=#000000 size=2></FONT> </DIV> <DIV><FONT color=#000000 size=2>The cute thing about Cassidy is that he'll let slip the idea that maybe we should care about the distribution of wealth: "One reason [for faster than expected growth] was the stock market's rise, which has added about $12.5 trillion to total household wealth since the end of 1994. (If it had been divided equally--it wasn't, of course--this asset-price inflation would have added about $125,000 to the paper wealth of each American household.)"</FONT></DIV> <DIV><FONT color=#000000 size=2></FONT> </DIV> <DIV><FONT color=#000000 size=2>Also, he'll raise issues that point in the direction of political economy and class struggle. For instance, "A week later, some new figures showed that the employment cost index, which Greenspan considers a key measure of inflationary pressure, rose by 0.9 per cent in the second quarter. This may not sound like much, but during the last  twelve months the index has risen by 3.5 per cent, compared with 2.8 per cent in the previous year--an acceleration that is consistent with the view that the economy is operating beyond its sustainable level."</FONT></DIV> <DIV><FONT color=#000000 size=2></FONT> </DIV> <DIV><FONT color=#000000 size=2>You have to laud him for attempting to explain economics to non-economists, but he's no Henwood. My crystal ball says the crash will be set off by one of two events: a rise in interest rates or the resignation of Rubin. Unlike the name-calling Mark Jones, I don't think the crash will be followed by a descent into depression and all-around economic hell, like what's happening in Russia and Asia.</FONT></DIV> <DIV><FONT color=#000000 size=2></FONT> </DIV> <DIV><FONT color=#000000 size=2>Peter</FONT></DIV> <DIV><FONT size=2><BR>When Black Friday comes</FONT> </DIV> <DIV><FONT size=2>I'll stand down by the door</FONT></DIV> <DIV><FONT size=2>And catch the grey men</FONT></DIV> <DIV><FONT size=2>When they dive from the fourteenth floor</FONT></DIV> <DIV><FONT size=2>When Black Friday comes</FONT></DIV> <DIV><FONT size=2>I'll collect everything I'm owed</FONT></DIV> <DIV><FONT size=2>And before my friends find out</FONT></DIV> <DIV><FONT size=2>I'll be on the road</FONT></DIV> <DIV><FONT size=2>When Black Friday falls you know it's got to be</FONT></DIV> <DIV><FONT size=2>Don't let it fall on me</FONT></DIV> <DIV><FONT size=2></FONT> </DIV> <DIV><FONT size=2>When Black Friday comes</FONT></DIV> <DIV><FONT size=2>I'll fly down to Muswellbrook</FONT></DIV> <DIV><FONT size=2>Gonna strike all the big red words</FONT></DIV> <DIV><FONT size=2>From my little black book</FONT></DIV> <DIV><FONT size=2>Gonna do just what I please</FONT></DIV> <DIV><FONT size=2>Gonna wear no socks and shoes</FONT></DIV> <DIV><FONT size=2>With nothing to do</FONT></DIV> <DIV><FONT size=2>But feed all the Kangaroos</FONT></DIV> <DIV><FONT size=2>When Black Friday comes I'll be on that hill</FONT></DIV> <DIV><FONT size=2>You know I will</FONT></DIV> <DIV><FONT size=2></FONT> </DIV> <DIV><FONT size=2>When Black Friday comes</FONT></DIV> <DIV><FONT size=2>I'm gonna dig myself a hole</FONT></DIV> <DIV><FONT size=2>Gonna lay down in it'</FONT></DIV> <DIV><FONT size=2>Til I satisfy my soul</FONT></DIV> <DIV><FONT size=2>Gonna let the world pass by me</FONT></DIV> <DIV><FONT size=2>The Archbishop gonna sanctify me</FONT></DIV> <DIV><FONT size=2>And if he don't come across</FONT></DIV> <DIV><FONT size=2>I'm gonna let it roll</FONT></DIV> <DIV><FONT size=2>When Black Friday comes I'm gonna stake my claim</FONT></DIV> <DIV><FONT size=2>I guess I'll change my name.</FONT></DIV> <DIV><FONT size=2></FONT> </DIV> <DIV><FONT size=2>--Steely Dan, "Black Friday"</FONT></DIV></BODY></HTML>