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Strategies & Market Trends : Analysis Class for Beginners

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To: Arthur Tang who wrote (1294)	3/27/2001 6:08:00 AM
From: Arthur Tang	Read Replies (3) of 1471

Back to equity investment strategy; from naive politicians who tries to run and ruin the new economy. The economy was ruined by Greenspan when he raised interest rate at the overnight discount window of the New York FEDS. Each night the member banks had to pay more interests to the FEDS than they can collect from their customers. The operation loss caused depletion of reserves and the money to loan to their customers disappeared. Demand loans were called and customers went bankrupt. The sudden death of corporation had a domino effect. The vendors all suffered irreparable losses and people were fired when business went belly up. The economy tanks really fast. The fix for this has been repaired by lowering the interest rate, more so, that the banks can rebuild their wealth to have money to loan their customers to save their businesses. Even though the rate cuts are not sufficient to quickly save businesses, it is a start. The consumers now will also benefit to the extent that they can save money in their mortgage refinance. This will pump the demand side economy much more effectively. It is always the lowering of long term cost of living that builds a deflationary trend new economy. The wealth built will be able to afford a higher standard of living at a lower cost. It is one of the new economy principles. So, the economical principles are intact. And the speed of recovery depends on how fast the FEDS can pump up the banks. How come tax cut is not effective is explained by the fact that defects are in the bank reserves, not consumption decrease, even though savings are up some. Wall street will recover once the strong message is heeded by the FEDS. Now the true value of equity will have to support the $16 trillion economy. I see a great future for America. God bless America.

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