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Technology Stocks : Compaq
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To: Captain Jack who wrote (68905)10/15/1999 8:22:00 AM
From: rupert1   of 97611
 
To paraphrase Greenspan: when banks calculate what reserves they need to provide for down-markets, they should not rely on predictive models which provide only for periodic or cyclical corrections of 10-15%. Such corrections are usually orderly. They should make provision for disorderly or panic corrections which exceed 15%. While such market panics may be comparatively rare - just as fires in a business are rare - a prudent banker will take out "panic insurance" the same way he would take out "fire insurance".

This is a lecture in "Central Banking 101". But because it is Greenspan, and because it is a public lecture, the market has a right to wonder whether it is a veiled warning from the Federal Bank that a severe market collapse has become more likely.
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