Question:
If the Dow -- instead of the Nasdaq -- was down 35%, 45%, 55% .... would the Fed have acted to lower rates yesterday?
We all know there was an historical speculative bubble in the nasdaq that could not have continued indefinitely. But at the same time the present economy looks very different from the economy even a short 9 or 10 years ago... That is to say technology plays a much, much larger role in the overall economic landscape than back in 1990. The commercial internet as we know it today did not exist.
The Sunmicrosystems, Ciscos, Emc, Oracles, Aols were not known as the stalwarts of the economy.... NOW they are!! And the Fed Chairman is choosing to ignore that the General Motors, Johnson & Johnsons, etc. aren't the only game in town.
Mr. Greenspan is ignoring the overall effect this will have on the economy! 50% of the U.S. population now own stock either directly or through funds.... I believe that is roughly double the amount in 1990. This drop in paper wealth, though previously inflated, will be the source of the impending downturn. We are seeing it in the weak autos, computer, and overall spending. He has achieved the slowdown.... unfortunately --- it will be a crash.
The rest of the world looks to the U.S. for leadership.... Mr. Greenspan is failing not only the U.S..... but the world. |
