Maybe Voltaire is on to something...
From The Street.com:
Commentary : The TaskMaster
As the World Earns
By Aaron L. Task
Senior Writer
1/19/00 9:58 PM ET
...."Long-standing readers of this column know I love a good conspiracy theory. Here's a lulu.
A market strategist at a West Coast firm contends the only reason Federal Reserve Chairman Alan Greenspan was reappointed to another four-year term -- six months before his current term expires -- is to provide him a free hand to tighten economic policy now, rather than having to take action during the heat of the election.
Not so outrageous, but it gets better.
The source, whose name I'll omit because sometimes sources need to be protected from themselves (and black helicopters), said the decision was made because Bill Clinton doesn't want the Republicans to retake the White House, and thus oversight of the attorney general's office. (Immunity, anyone?)
Wait, there's still more.
The strategist further argued Greenspan -- via a series of rate hikes and hawkish comments -- will send the Comp more than 30% off its all-time high by early May and the Dow down nearly 20% from its record.
Then during the market's darkest hour, he forecast "something" -- like a bank failure or hedge funds getting in trouble or a Chinese devaluation -- will occur, forcing Greenspan to "bail 'em out" with lower rates. That easing (yes, "easing") will re-ignite the economy and send stock proxies back to near all-time high levels by late next year, or just in time for the first Tuesday in November.
Sound crazy?
Well, it is, according to Thomas Gallagher, who follows such political-economic issues as senior managing director for International Strategy & Investment Group in Washington, D.C.
"That's nuts," Gallagher said of the theory, noting it not only suggests the Fed would sell out its independence for political reasons (egads!), but that the central bank can control the economy "like a dimmer switch."
If -- as is widely believed -- Fed action takes six to nine months to filter through the economy, any tightening now will "hit right during the campaign season," he said.
Ah, well -- it was fun while it lasted. " |
