Forum Archive Index - April 2000

["Oliver Shapleski" <oliver.shapleski@vuw.ac.nz>]

Jesse - i fully agree that Greenspan will be chuckling (or at least wryly smiling) at the events of wednesday through Friday.  However, I do think that if the selling continues through to Wednesday he may be rethinking strategy having pushed things one step too far.  The gradual increasing of interest rates since last July has done very little to stem the surging markets, yet now the markets have corrected themselves!  My thought is that this downward plunge will be enough to bring consumer spending to a major halt (what little fraction of the CPI numbers there is beyond the oil contribution...) so as to require a softening of interest rates lest the US consumers do lose ALL confidence and indeed do bring on a severe economic depression.  No doubt a recession has started.  It has started very quickly too, and Greenspan will not be looking to spend his last term in office stuck in a depression.  Pity they lost wassis name - Rubens?  Quite sure he'd be following my philosophy on this one.  Government intervention is only useful to correct market failures, and a lack of confidence in the US market is, IMVHO, a very obv market failure.

 

If the market does plateau by Wednesday (and I think it will plateau by then much lower than it is now, for what that's worth) Greenspan should do nothing - maybe another rise after next month's figures come out.  Frankly you'd be somewhat rash to act on this months figure given the obvious weighting from one particular sector.  And jeez, if Brash announces a rate rise here on Wednesday I'll have a good mind to go down The Terrace and tell him where he should be putting his interest rate rises. 

 

I think I'll turn off the computer for a while - all this red is making me queasy...

 

Jungen.