OT: Brian, I got a good chuckle from your comment:
Greenspan can make the "Doomsday" scenario happen... I don't think he is a Slim Pickens wanna be, riding a thermo-nuclear rate hike into the heart of Silicon Valley
I would like to use the analogy of an oncologist fighting cancer. The cancer in this case is the frothy speculation of the Nasdaq and Dr. G is the oncologist ready to inject the patient with a new chemo cocktail. Basically, he wants to kill the cancer cells without killing the patient. But he has never used this cocktail before, so, the outcome is very uncertain.
What might this 'cocktail' consist of: one 50 basis point increase in the Fed Funds Rate, one 25 basis point increase in the Discount Rate, setting margin rates to 75% and increasing the lending ratios banks must meet to 90%. (I believe this is sometimes quoted the opposite way, ie. 5%, such that for every $5 of deposits the bank can loan $95)
Maybe an ugly analogy, but, perhaps this is the best way to describe a scenario the Fed might concoct to get itself out of the nasty situation it helped create in the first place.
Cheers, Keith |
