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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: flatsville who wrote (59237)1/18/2001 1:26:00 PM
From: Mike M2  Read Replies (2) of 436258
 
Flats, I suggest that the Commerce Dept's abuse of hedonics is a far greater scandal due to the nature of its far greater economic implications. The fact that stock market valuations have reached unprecedented levels cannot be disputed but the reasons why are. The bulls - Wall St, mutual fund industry, the finacial press The Fed, Commerce dept et. al. would like us to believe that there was not irrational exuberence because the US has undergone a growth and productivity miracle thus higher valuations are justified. The bears assert that the economic miracle is more of a mirage and the true driver has been unprecedented credit excesses. If we were to cut stock market valuations in half we would still be near historically high valuation for the peak of an economic expansion. The loss of paper wealth would be $6 trillion ? far greater than the ? who knows how many billions in reduced COLAs resulting from the BLS understatement of product price inflation. The resolution of this bull/bear debate will have a profound impact on the state of the economy for the rest of the decade and beyond. I would prefer to leave politics out of this because it clouds the issues which impact all Americans but I get irritated when Clinton supporters twist the facts. I am not an expert on gov't and who calls the shots but it does seems to me that the executive branch has far greater control over the BLS, Commerce Dept etc than the legislative branch.I despise Bill Clinton but I would agree there is blame enough for all politicians. The one individual who is most responsible for the current situation is without a doubt Alan Greenspan so we can blame republicans for selecting him and Clinton for keeping him. I will address the issue of hedonics more substantially in a later note. mike
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