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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 672.04

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Nov 13 4:00 PM EST

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To: Les H who wrote (70985)	3/2/2001 1:10:15 PM
From: Psycho-Social	Read Replies (1) of 99985

Greenspan in the 1990-91 Recession: Kept interest rates steady until mid-December of 1990, approx 4 mo after the economy began contracting. If memory serves me correctly, he acknowledged the existence of the Recession sometime in early 1991. Lowered interest rates 5 times in 1991 and once more in mid-92. If past behavior predicts future action, the Fed (and Congress) may be late getting started, especially given the 6 mo or so lag time involved, but they may continue fighting the recession long after it's over. The political pressure to combat economic weakness is usually generated by rises in the unemployment rate, which is a lagging indicator. Also, the inflation rate, which tends to stay the Fed's hand when it's high, tends to decline during and just after a recession. Conclusion: We may have the worst of all worlds now, but stimulative policies may continue well after the recession/soft-landing ends.

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