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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Zeev Hed who wrote (2768)12/28/2000 11:51:48 PM
From: Hawkmoon   of 3536
 
Well Zeev, I can see the bursting of the internet bubble as something that had to eventually occur.

But the valuations of the stock market are one thing and the unwillingness of consumers to maintain the "cool heads" you desire, quite another.

I'm worried about people hunkering down to such an extent that they move to irrational pessimism and cause more damage than necesary to economic growth worldwide. Fear is incredibly contagious and self-perpetuating. Even more so, imo, than the greed that AG worries about.

Especially as companies like Montgomery Ward close their doors and lay off 37,000 workers in one fell swoop. Events like that will quickly bite into your theory that unemployment is still worrisomely high.

Consumer confidence is barely above where it was in Sept, 1998 when LTCM almost caused a financial lock up. One that was only avoided by the Fed rapidly cutting rates 3/4 points over a month and flooding the system with liquidity.

Now why is it so unreasonable to expect the Fed to act moderately over time, rather than being forced to rashly act at the last minute.

We all know that interest rate moves require months to take effect. The Fed should be proactive in making sure that the pain doesn't become panic. As it stands now, I get the sense that it causes more instability than it resolves.

Regards,

Ron
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