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Greenspan opts for 1000 basis point increase as a preemptive strike against possible inflation at the turn of the century. Although PPI, CPI, wages, global capacity utilization, gold prices, commodity prices(excluding energy), and inflationary trends are under control, Greenspan feels U.S. firms are too competitive and are making too much money. As a result, he would like to see Corporate America regress to the 1970's model of no profits, non-competitiveness, heavy debt,and high borrowing costs. In other news 3com and USRX are filing for bankruptcy and will be listed on the Russian Stock Exchange were stock prices are only up 70% over the past year. Management feels that investors are much more rational there. Greenspan cut in, recommending the firms move to the Nikkei where stock prices trade at price multiples twice that of U.S. firms and where earnings efficiency (ROE,Margins) is not half as good as the U.S. Greenspan feels that the exuberance there is warranted since Japan is such a nice place to live. |
