>>popping the balloon with Gore standing on top of it would not be all that rewarding either....
Funny, but Greenspan has been arguing for moderation, he wanted a 1/4 point. It's been the Clinton-AlGore the Junior appointees that demanded the 1/2 point move:
...
The Fed's anti-inflation hawks are driving policy. Laurence Meyer, a former St. Louis economic forecaster and economics professor who was named a Fed governor by President Clinton four years ago, has been resolute in targeting economic growth. Meyer had the votes Tuesday, and it is doubtful that Greenspan could have overcome him. But he didn't try.
Not since an intransigent Paul Volcker was voted down by his colleagues on March 6, 1986 (in a decision to cut interest rates) has a Fed chairman been rejected and humiliated. That vote ended the Volcker era, and he left as chairman the next year. Greenspan, just reappointed for a third term by Clinton, will not take that path.
But what's next? Super-hawks do not want to stop with a federal funds rate (on lending between banks) set Tuesday at 6.5 percent. They contend that this interest rate should be at the same level as the nominal (that is, not adjusted for inflation) rate of economic growth, now 8 percent. To follow such a painful course would mean climbing another 150 basis points in the immediate future. Nobody thinks that is possible, but Meyer and his colleagues seem determined to raise interest rates so long as the economy is growing.
In fact, despite the growth rate, there are ominous economic indicators. Retail sales and auto sales are both down. The loss by NASDAQ of one-quarter of its wealth certainly takes significant consumption money out of the economy.
Those were real numbers faced by Greenspan Tuesday. The conflicting set of numbers: the votes that were lined up against him by inflation hawks on the FOMC. The political choice was obvious.
suntimes.com |
