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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Lucretius who started this subject1/20/2001 6:32:36 PM
From: Les H  Read Replies (3) of 436258
 
Greenspan The Best Stock Broker Americans Ever Had

``Wall Street is so convinced that Greenspan will bail them out, that they are inclined to take greater risk than they would otherwise,'' says Ray DeVoe, market strategist for Legg Mason. ''The assumption is that in the event of a market panic, Greenspan will cut interest rates or just do something to smooth out the problem.''

DeVoe said he has heard of a ``Plunge Protection Team,'' a sort of fiscal commando unit involving people from the Fed, Treasury, the Comptroller of the Currency and the White House, who would formulate what is needed to prevent a massive selloff in stocks.

After the 1987 crash, the Fed reassured Wall Street that it was there to keep the flow of cash going amid the crisis. And in 1998, the central bank cut interest rates to prevent a global run in financial markets amid the Russian debt default and the Asian economic meltdown. Both times, the central bank did the right thing and the market roared back.

DeVoe believes that the ``Plunge Protection Team'' probably had a hand in the Fed's surprise decision in January to cut interest rates as the stock market was getting clobbered.

``The fact that the Fed lowered interest rates while the stock market was opened for business looked like a sign of panic,'' he says. ``The economy's soft landing may be developing into a rocky one and they wanted to slow down the momentum.''

dailynews.yahoo.com
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