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Technology Stocks : Amazon.com, Inc. (AMZN)
AMZN 225.84+2.3%2:18 PM EST
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To: GST who wrote (81016)10/18/1999 1:19:00 PM
From: Rob S.  Read Replies (2) of 164684
 
Greenspan has stated repeatedly that it is not the FED's role to directly influence the stock market. But when the bubble in the stock market grows to such proportions that he and other world monetary leaders believe that it poses a threat to the stability of capital markets and economic stability, then he is compelled to reign in the "irrational exuberance". Recently Germany, Britain, Japan and other G7 leaders strongly cautioned that run-away inflation in U.S. stocks poses a threat to their economies.

So the FED is compelled to tighten convincingly through the means at it's disposal, such as causing banks to raise their loan risk ratings and cash reserves in addition to rising interest rates. Now that the Asian and general world economic situation appears growing and stable, Greenspan is free to pull in the reigns. CPI numbers and other figures are important but is only the most obvious part of what is driving this decision. The bloated stock market is viewed as a big problem in itself. The FED must at least try to prevent it from continuing to go nutty - with super wide divergence between the go-go darling stocks and the real world economy.

"Yea but we have heard that talk about "irrational exuberance years ao when the NASDAQ was 1/2 it's current value" some have said. True, but what is different betwen 1996 and now is that Asia, S. American, Russia, etc. were collapsing so the FED's hands were forced to pump things up even though it might have saw fit to tighten otherwise.

But what the heck, a few trillion in valuation here or there, what difference does it make? After all, this is the NEW ECONOMY!

I think the nets and NASDAQ will move down further. We have not seen rampant selling - only a steady and orderly pull-back thus far. NASDAQ has at least another 7% to the downside to go before it might find support - or crash through. Before it turns convincingly we probably need to see blood in the streets; a panic sell-off on very large volume.

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Go Greenspan et al - tighten down the spigots!
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