Orson,
Did you actually hear Greenspan say that? (about the benefit of a balanced budget package will restrain the Fed from raising rates)OR what is your source on this....I'm just curious because I haven't heard it put so directly. I agree that if they can GET IT DONE, is a good thing. But, it will be a good while (years) before we get to see real solid evidence that they can stay on track.
I have heard that in their Projections to reach a balanced budget, they make assumptions that the Economy will remain strong from now through 2002...maybe it will, but this healthy cycle is now 6 years old.....so, an 11 year healthy period seems like a rosy projection.
Also, does anyone know when the major balancing part of this plan takes place. Many of the other proposals called for the hard medicine to come after Clinton leaves office.
Back in the 1950's (for example) our National Deficit wasn't nearly as substantial as it is today....but even during that period, a PE on the S&P 500 of higher than 20 appeared to be unsustainable. So, for folks to say, now we are in a whole new era sounds like a Risky Theory to Accept as Fact.
IMO, the PE's of companies still have to be justified by their earnings and growth rates, etc., not some abstract idea of the Government balancing the budget 5 years down the line. In other words, a company growing earnings at a rate of 20% annually and selling at a PE of 20, doesn't automatically deserve a PE of 30 just because the Gov't may balance the budget....
Enuff of me rambling. |
