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Pastimes : Trading the markets.....
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To: Chip McVickar who wrote (3823)3/1/2001 5:50:35 AM
From: GROUND ZERO™  Read Replies (1) of 4583
 
I think it's the other way around, let's not put the cart before the horse...<g> the rate increases over the past 18 months are responsible for eroding consumer confidence in new home sales and auto sales, those bigger ticket items... while this series of rate increases slowed the so called irrational exuberance in these markets, it also slowed earnings due to this eroding consumer confidence... but more importantly, and far worse, those higher rates inhibited companies from borrowing money for continued corporate expansion, therefore reducing corporate earnings... so now, we have market deflation along with an accelerated decrease in consumer confidence - lower corporate earnings are a byproduct of Greenspan's heavy handed interest rate hikes... a free market system doesn't need an interest rate czar to meddle with a market system that works pretty well on its own... I submit that it was Greenspan himself who caused this slow down in earnings and consumer confidence in the first place with his heavy handed rate hikes and not the other way around..... I think we have a causal effect, and Greenspan's fingerprints are all over it... and yesterday, Greenspan said that "new home sales and auto sales are still at an acceptable level" but the auto makers are reporting major quarterly losses, Greenspan is asleep at the wheel although he should not be behind that wheel in the first place.....

GZ
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