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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00160

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Nov 26 9:30 AM EST

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To: richard w allgaier who wrote (45173)	2/9/2001 12:16:30 PM
From: KyrosL	Read Replies (1) of 45548

Rick, the Fed controls only short term interest rates. Long term rates are controlled by the market. And the market consist not only of Americans but increasingly of foreigners, who hold a large percentage of LT government and corporate debt. If the Fed drops ST interest rates faster than "the market" deems prudent, long term rates will actually rise and any beneficial effect of low ST rates on the economy (and stocks) will be cancelled out. If the foreigners start selling their US holdings because they think our rates are too low compared to what they can get elsewhere in the world, our dollar as well as our stock market is toast. That's why for the last couple of years (ever since we have become solidly a debtor nation) the Fed has been doing what the market is telling it to do. It does not want to piss off the holders of our debt. Kyros

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