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Technology Stocks : PC Sector Round Table
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To: Sam who wrote (1971)10/20/1999 11:53:00 AM
From: Robert Douglas  Read Replies (1) of 2025
 
Sam,

<<<I still think that the Fed could relieve a lot of this by getting margin requirements increased (do they set that or does the SEC? I'm not sure, but I am sure that they would work together somehow), and they could relieve some of the real estate bubble through some constraints on bank residential lending.>>>

In answer to your question, I believe it is the Federal Reserve Board, i.e. the seven governors, that set margin requirements. This is slightly different from the 12 member FOMC which sets the target for the Federal Funds rate.

I'm in agreement with you that margin rates should be(should have been) raised and perhaps pressure put on banks to curtail real estate lending. But unfortunately, I believe that the FOMC will still have to raise rates to slow the economy. This will be because job growth is still proceeding at a pace that will eventually result in wage inflation. It is wage inflation that Greenspan fears not a rise in the price of oil or even a rise in asset prices. The good news is that the long end of the yield curve has risen much more than the short end, which will surely help slow economic activity. A soft landing is still a possibility, but this economy will slow one way or another.

-Robert
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