> How? Why? Whaddya mean?
>
It would have been spinned to link to the stock market (since Greenspan
characterized the economy as 'resilient' just last month) evoking remarks
from Bush & co. about the positive combined impact of harsher corporate fraud
penalties (a useless afterthought) and supportive monetary policy. But, the
erosion in stock market value over the past two years, and more spectacularly
over the past couple months, was due to the discovery that all the balance
sheet inflation, growth in R&D and technology, and over-expansion was built
on quicksand. The 11 rate cuts over the past year didn't boost the market or
the economy, because they couldn't change that basic fact. Cutting in mid
August when markets are even more volatile because of the sheer lack of
participants - while we're already at 1.75% uses up a bullet. A cut would
have boosted the markets for a day, two max before they crashed even lower.
It would have been construed as positive for a few minutes, before the
realization set in that there's no room to go much lower. That said, I
believe Greenspan will cut rates after another round of economic data and
AFTER the FOMC meeting on 9/24 (as has been his controlling custom - he never
cuts when everyone's looking.)
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