Michael, very good points. 20 on the BB's. Regarding Greenspan...it's hard for me to agree with raising rates 6 straight times due to irrational exuberance in the stock market. It takes a min of 6 months before results are seen from rising rates.
Once you stop a train completely, it takes time to get it moving again. Unfortunately, IMO we will see just that, a derailing by next year. I think he could have continued to tap on the breaks to allow the train to slow down, before an inevitable crash. I don't understand his actions, when he knows raising rates will take time to work.
Now he will inevitable lower rates next year, but by this time, the damage will be to severe. Layoffs are starting to hit home. Banks are getting crushed due to eating bad loans by corporations. We haven't begun to see this play out yet. A recession is imminent, and it could have been avoided IMO, if he would have tapped on the breaks for a couple of years, versus slamming on them.
Blowing the top off of a market in a 6 month period, will have detrimental consequences to the economy. Take a look back when we have had our other declines in the market. It took nearly 6-8 years for the damage to heal. I don't think that will occur, but it's inevitable you have this much wealth being destroyed, and not have a major impact from it.
KM |
