> But... but... they don't *want* a higher stock market, and they don't *want* people believing in a Greenspan put.... Well, maybe not usually. But isn't this exactly what they've been targeting for the past six months? Given the choice between the risk of creating a Greenspan put and the risk of watching the U.S. economy meltdown, along with much of the world, I think they're betting on the Greenspan put.
Seth Ackerman wrote:
>Unless you think an economic meltdown is so totally out of the question that the Fed isn't even thinking about it....
After the last set of interest rate reductions, I thought it was pretty clear that the tail was wagging the dog. Even the WSJ said that Greenspan was betting on something he called the "announcement effect" and said he had very mixed signals regarding the real sector--none of which made rate cuts absolutely necessary.
It would seem that this is exactly what the Fed wants. It's getting slow growth, rising unemployment, and a still overvalued--if sluggish--market. AG's concern about the real sector is totally secondary: it's only so good as it produces a quick financial turnaround. But his concern about it now may suggest Seth is right: what they really expect is a complete financial sector shakedown.
Christian