Some interesting thoughts from IPS Funds...
<<Our economy does not, and should not, need to depend on what Greenspan does or thinks. If he is successful at what he does, no one will know he even exists. The economy is more open and less regulated than ever before, posseses virtually infinite numbers of feedback loops, and processes so much data so much more quickly than the Fed, it can adjust much faster and more effectively on its own. Unfortunately, the Fed and Greenspan have screwed things up very badly this time, by withdrawing far too much liquidity from the system.
It's because our government officials have come to depend on him to a far greater extent than in the past, and Greenspan has come to believe his own press. He is now taking actions that are completely outside the mission of the Fed. Adding huge sums of money to, and then withdrawing them from, the economy violates the most basic mission of the Fed, which is to maintain a stable money supply so that business has a predictable environment in which to operate. Clearly, Alan Greenspan, the Fed and our government have come to distrust the ability of a free market economy to adapt to changes on its own, and have come to believe that a single person knows more, and knows it sooner, than the markets do.
When you create a situation where something as complex as the economy depends to this extent to the decisions of one single person, aging or not, it ought to be clear to the most dimwitted that this is not a healthy situation, and creates a whole new level of uncertainties. Even corporate CEOs and the President of the U.S. do not have as much power as the press and government officials attribute to Greenspan. This dependence is exacerbating economic uncertainty, by adding uncertainty about what Greenspan will do next to uncertainties about the future for immature sectors and companies.
The economy will recover. The market will recover several months ahead of the economy. Nevertheless, as long as we allow an egomaniacal Fed chairman to violate the Fed's most basic mission, and tolerate a press that is spoon fed by government and Fed officials and unable to think for itself, we will have an economy with greater uncertainties and risks than it should have, and businesses will have a more difficult job of planning for the future than they should have. It is past time to replace Greenspan with a Fed Chairman who understands his job, and get on with the business of building our country's future with as little disruption and uncertainty as possible. ">>
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JRI: So far you are right about some further downside...the market is as nervous as it gets...plenty of money on the sidelines now...Yet, I have a LONG time horizon with most of my current investments and still remain cautiously optimistic. Greenspeak's legacy is on the line....IMO, the moves he and his team make in the next 6 weeks will help dictate if our economy and markets will be able to rebound later this year....He has the opportunity to correct some serious mistakes and make wise decisons -- sooner rather than later would be preferred though <G>.
Best Regards,
Scott |
