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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: bobby beara who wrote (32)10/22/2000 11:08:57 PM
From: tradermike_1999  Read Replies (1) of 74559
 
Beara - the interest rates. Fed lowered the interest rates and helped to create a stock market bubble in Oct 1998. This year they have raised them and are creating an economic slowdown - which is growing everyday. The problem is that there are economic imbalances in the economy which may cause the dollar to fall and inflation to pickup. They may be force to raise rates even further next year. That's the scenario which would cause a complete market collapse and extended recession that would last more than a year.

The best case is that Greenspan has raised interest rates at the perfect level and we'll a "soft landing" - GNP growth slows to 2.5-3.5 and by this time next year we'll be back to a bull market. The Fed has never created a soft landing.
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