Art, the use of the "margin requirements" is antiquated, that is why the feds are not and will not use it. With all the derivatives around, there is very little sense in changing margin requirements. AG had to step on the brakes, not because of the market, but because he over injected funds late in 1999 in fear of a y2k seize up of the financial markets. Of course, that money injection ended up in the market, and when it was taken out, so went the market. The market went bezerk in early 2000, and a real danger of a crash was there if it would have been left to continue.
Why is everyone blaming Greenspan, I am not sure, when they bought stocks with stratospheric PE they had only themselves to blame. In late 1999 and early 2000, I wrote a lot about the "musical chairs" game going on, but we all enjoyed that game too much to pay attention to the possible consequences when the music stopped.
Zeev |
