I doubt if Greenspan sees this as an "emergency". IMHO, he probably sees it as a desired result of his "genius" in managing the money supply and interest rates.
If the Dow were tanking along with the NASDAQ, he might see more of a case for doing something. But as long as the carnage doesn't spill over into the Big Board, I believe he's viewing this just as an opportunity to douse some of that "irrational exuberance".
If high oil prices, huge shorting by the hedge funds, dissing of techs, continued election uncertainty, and increasing loss of confidence by the public continues, however, he might have more on his hands than he can handle with a mere lessening of interest rates. Just like higher rates take time to slow the economy down, lower rates don't act overnight either. If he isn't careful, he could have an avalanche on his hands.
Regards,
Knip |
