Bill,
re: "The people at the FED say they are responsible for the economy and inflation but is it not ironic that the FED follows the bond market on interest rates except when they want to jawbone or be noticed . As an institution it is time to to retire the group and provide some fresh thinking on how to manage the economy ---just my two cents ."
I agree with your first sentance. I'm not sure what we would replace them with, some say a computer program. But there is a human element as well. When Greenspan lowered rates in 1998, in response to the Asia currency crisis, could a computer program have done that? It was a judgement call, that turned out OK, we will never know if it would have been OK if nothing had been done.
re: "on the overcapacity issue I find it suprising that the whole technology gambit ( PC's , Telecom , Cellphones etc ) was basically off by 25% on the demand side for this year ? What does that say about the industry management missing expectations by that much ? Of any industry that should be able to do real time forecasting on sales you would think it would be this group . I understand the economy cool but 25% is a big miss."
I agree and it goes to your argument that things are different and need to be handled differently. With JIT inventory control, and the efficiency that tech has put into the supply chain, I think that it exasperates a slowdown. At the first hint of a demand issue, everybody along the supply chain has the capability and vision to just shut down. My guess is that it feeds on itself. This is the first real slowdown we've seen since these technologies were put in place, so I think we are in virgin territory. Also my wild guess would be that when things begin to pick up, that should happen at the same velocity. On the other hand, maybe things will continue to spiral down out of control.
Greenspan in his last testimony talked a bit about things happening faster, and that the FOMC had to react faster. I haven't seen that happen, and I'll criticize them for that. But I still believe they are reacting, not leading the economy. They will need to react faster. Greenspan also claims he has much better visibility, I'm skeptical there as well, based on recent performance.
John
PS Don't get me started on drug costs/health insurance. We had that debate here last week, and I think I was alone on my side of the argument. |
