Greenspan's MAJOR ERRORS
1. vastly increasing money supply liquidity, and loosening lending restrictions in preparation for Y2K... he expected massive withdrawals, scattered crises, and snafus... he aint no computer expert apparently
2. vastly reducing money supply liquidity, and tightening lending restrictions in order to reverse the Y2K effect... the icing on the cake was the 50 bpt hike in April... he had already tightened too much at that point... he was overreacting to large CPI in April, the direct response with delay to the unprecedented increase in money supply
3. interpreting higher crude oil prices as inflationary... wrong, and he finally admitted that last week... it cripples earnings on a grand scale, while increasing energy costs
4. not cutting interest rates in November... he didnt even go to a neutral bias... I dont even allow him the forgiveness of holding back due to unresolved Prez race... the week prior in MexicoCity he had warned about worldwide economic slowdown
5. ardent belief in the Phillips Curve, which claims a direct two-dimensional relationship between inflation and unemployment... wrong, enter productivity, technology, money supply factors... Greenie refused to relieve the pressure on money supply while unemployment was below 4.0%
6. failure to understand that the Y2K effect had a built-in slowdown mechanism after the new year... all that spending prior to Jan1st would be followed by less spending... all that tightness in labor market would result in less hiring and planned curtailment of expansion
7. tighter monetary policy, higher energy costs, and post-Y2K effect ALL TOGETHER HAVE RESTRICTIVE EFFECTS ON ECONOMIC GROWTH
I maintain the Federal Reserve should be abolished
they have never engineered a soft landing
HE WENT INFORMALLY TO A NEUTRAL BIAS LAST WEEK
NOW HE MUST LOWER INTEREST RATES
A NEWSLETTER EDITOR OF MINE DESCRIBES GREENSPAN AS ACTING LIKE A "DRUNKEN SAILOR" SINCE LAST NOVEMBER
the parade of earnings and sales warnings is without precedent
the economic slowdown underway is without precedent
Greenspan does not deserve ANY of his extreme Godlike praise
gonna require keen navigation to sell into rallies
some will last for more than a day
watch the trendlines
I dont think the next one will make it to Naz3000
I expect to see 2100-2200 by March
broke, Jim |
