On Tue, Aug 13, 2002 at 05:46:17PM -0400, Nomiprins at aol.com wrote:
> In a message dated 8/13/02 4:49:21 PM Eastern Daylight Time,
> dhenwood at panix.com writes:
>
> > 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.)
>
> Nomi
-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu