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Pastimes : FED TALK
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To: Jeff Jordan who wrote (29)12/15/2000 8:26:11 PM
From: Kelvin Taylor  Read Replies (3) of 94
 
Greenspan raised rates for two reasons: slow the economy BUT also to choke off the market. Remember that he made a statement more than a two years ago the market was about 40% overpriced.

The rate hikes have slowed the economy so much now corp. profits are dropping and stock prices have over reacted on the down side. IF only the FED has stopped at one or two rate hikes then the economy would have slow but not to the point of hurting profits.

When companies see lower earnings the next measure is to cut cost and labor is the biggest expense. Watch the unemployment rate over the next few months to see if that happens. Hopefully it won't. Rising unemployment, high interest rates and inflation are ingredients of a recession.
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