GV- I have to disagree with (what I believe) is your premise. A cut was needed here...The world economy is in an absolute mess. Japan will be basket case for years. Latin America is struggling big-time. Europe is purely slow-growth now, and even that is jeopardized if the "buyer of last resort" U.S. has no growth for a couple quarter...the domino effect of lower exports to U.S. will lead to less trade intra-Europe, and European countries may go into recession next year.......the tax cut that Bush's wants (and Greenspan hates) isn't even going to happen (or, if so, to a very small extent), because the surplus is going up in a smoke of lesser corporate profits and small capital gains intake, by next year (already!)....
Employment? I think we are going to be in the 5%'s by summer...that doesn't sound that bad BUT a good % of jobs are low pay, service anyway...those aren't going to be affected ..but high-paying tech jobs are going to get hit good...bigger financial impact for the economy...these folks pay big taxes...."Reverse wealth effect" is going to be enormous, and has hardly been felt yet....Real estate, boat sales (OK, sorry, I live in Fla.- but a big industry in Ft. Lauderdale), car sales...all struggling mightily...Manufacturing struggling......Layoffs coming from big/small firms...absolute dot-com implosion next year...Even Dollar Tree warned today (!)..1st time in their public life....bad sign when the poor man's Walmart is warning!
I think it would have been much more sensible to cut rates today....and wait and see what the data was going to be like between now and January...if he erred today (let's say data comes in stronger than he wanted)..then he could pause in Jan.....one 25 pt. hike would not send us back above 4% permanently IMO...
The fallacy in Greenspan's logic is that while he recognizes the great productivity gains by implementation of high-tech equipment (and its wealth creation), by leaving overly-punitive rates on TOO LONG, he is slowing/will slow the great productivity enhancing "machine", slow the development of the internet, and slow the creation of great, great jobs for a great many people...that's the way to go here?
Greenspan was too late to end the bubble, and now he is too late to bring us out of it....shame on him...<G> BTW- I am hearing of big-time margin calls going out today after the close.....ouch... |
