would you invest in euros with the european sclerotic employment policies, their inability to adjust to turndowns, their innumerable payroll taxes, their lack of inventiveness, their value-added taxes. the dollar is "falling" versus the euro because the euro has bounced a little from its terrible fall. our money men are at least sophisticated enough to know that you don't raise rates to juice the currency. you're right that no reason to raise or lower rates is good. as you imply, the fed should leave rates alone and let this downturn run its course. but we don't like bitter medicine in this country, so they'll lower them. in 1952 i took a course with Ben Graham at the Columbia Graduate School of Business - a year after Warren Buffett, so he did better than i did because of that head start. Mr. Graham sent us all down to the library stacks to study stock prices versus interest rates for the 50 previous years. there was an obvious powerful inverse relationship. that'll happen now too. if there is "a huge budget deficit that has grown larger every year, and added to an ever increasing debt.", how come we are reducing our outstanding debt to the point that Greenspan fears we may have no government bonds and may wind up having to let the government buy private assets, such as stocks, with the surpluses - which i think you'd agree would be terrible. he gives that as a reason to support a tax cut. if Greenspan is so crazy and so crooked as to cite this possibility, you still surely cannot deny that we have just last month retired some billions in bonds. that's real, that's now - not an estimate.
you are right that the long-term projected surpluses are absurd accounting tricks and even sillier than the simple-minded extrapolation of 1999 growth.
that said, we do have good tools and a lot more know-how (through remembered past errors) to deal with recessions. and we have a good number of savvy ceo's with the world's best technology to help pull us out. their ability to act speedily is the reason this downturn hit so speedily. |
