The bullish slant to Greenspan's speech:
The past decade has been extraordinary for the American economy. The synergies of key technologies markedly elevated prospective rates of return on high-tech investments, led to a surge in business capital spending, and significantly increased the underlying growth rate of productivity.
His hallmark statement explaining how we can continue with high growth and low inflation. . . . PRODUCTIVITY.
Despite the marked softening in the flow of new orders into high-tech manufacturing firms in recent months, the level of these new bookings was still higher than in early 1999, a period of emerging euphoria.
Light at the end of the tech-bubble-tunnel?
As a consequence [of rate easing], some of the stringent financial conditions evident late last year have been eased.
That's good news in a nutshell.
Moreover, with all our concerns about the next several quarters, there is still, in my judgment, ample evidence that we are experiencing only a pause in the investment in a broad set of innovations that has elevated the underlying growth rate in productivity to a level significantly above that of the two decades preceding 1995.
In other words, Greenspan believes that "investment in a broad set of innovations" will resume and that the past year was merely a "pause".
By all evidence, we are not yet dealing with maturing technologies that, after having sparkled for a half decade, are now in the process of fizzling out. To the contrary, once the forces that are currently containing investment initiatives dissipate, new broadened applications of innovative technologies should again strengthen demand for capital equipment and restore solid economic growth.
Greenspan is saying that the tech wreck was a bump in the road, not the precursor of what is to come. This was his most aggressive market position statement of the night. . . and it was extremely bullish.
NOTE: This review was purposely written from an extremely bullish perspective. Bearish perspectives are likewise welcome here.
Rande Is |
