Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	1/31/2001 9:56:16 PM
From: tradermike_1999	Read Replies (4) of 74559

A great movie came out in the 1960s with the title Dr. Strangeglove: Just When I Was Learning to Stop Worrying and Love the Atomic Bomb. It was about the strategic doctrine formulated by Dr. Henry Kissinger called mutual assured destruction, or M.A.D. for short. The idea was that if the Soviet Union launched an atomic attack we would too and the world would be destroyed and vice versa, therefore no one would ever launch an attack. Fear of atomic warfare hung over the nation during the Cold War and some people went completely psychotic with atomic sickness. We came close to nuclear war twice. We don't worry about nuclear anymore. Today's mania is the stock market and our Doctor Strangeglove goes by the name Alan Greenspan and he is every bit as looney as the character in the movie. Will he save the economy and the market or blow both to bits? We got a guy running the Federal Reserve who tried to take the risk factor out of investment by bailing out international bankers when they put together loans that could not be paid by third world countries and Wall Street hedge funds that went wild on margin. It would have hurt the markets and economy if these guys failed so it seemed like the right thing to do to most people at the time - and who is going to complain about lower interest rates? But the only problem is that he just postponed the problems and in the process may have made them worse by creating a wild debt machine. Now we have to find out if the debt demons are so monstrous that interest rate cuts won't be able to make them go away. Today he and his colleagues on the Federal Reserve board lowered interest rates by 50 points. Just as expected the market sold off afterwards. And now people on CNBC are becoming pessimistic worry warts - wondering whether or not 50 points was enough or too much.

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