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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 659.00

+1.0%

Nov 21 4:00 PM EST

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To: HairBall who started this subject	3/20/2001 9:09:13 AM
From: j g cordes	Read Replies (1) of 99985

For the pontification thread.. I'm voting 75 basis, followed by another 75 for the following reasons. Despite the appearance of cooperation, there's a contest of agendas between Greenspan and Bush. The only way both win is with a sustained fast economy.. which is slipping. The tax "stimulus" plan is political pay back to his constituents for putting Bush in office. Greenspan has indicated many times his preference would be to lower debt as its the most beneficial and lasting spending benefit the government can make. It keeps real interest rates low which helps everyone. How do you manage to straddle both needs? With the recession we're experiencing, tax rates will not be as robust as expected or projected, he must see the layoffs and lost wealth effect on Wall Street. There's a numbers shortfall to accomplish both Bush's tax promise and Greenspans desire, which can only be met by keeping unemployment as low as possible and growth as fast as possilbe. Greenspan is old enough to remember long recessions.. most in Washington are not. If we have one. the baby and the bath water go out the window. The "old Fed" known for making slow moves realizes their rate changes infiltrate the economy more quickly than in the past. Hopefully I'm right about that, it shoud be obvious how quickly the last six rate increases slowed things down. Its one of the fiscal realities of the information age.. Fed debt rates work their way through the economy much more quickly, therefore there will be more changes per time period going forward. Greenspan watches sentiment because it is the fuel of a consumer society. I like to use the anology of whats happened with cars and braking systems.. We used to only have the single brake cylinder, now we have ABS which applies hundreds of braking episodes in the same time frame for slowing.. and we have micro metered injection to accelerate. I hope most Fed members read how new engines and feedback systems operate... with a goal of being real time. Besides, my portfolio says we need 75, then another 75... Cheers, Jim

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