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Strategies & Market Trends : New US Economy Policy
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To: Arthur Tang who wrote (289)8/12/2001 5:33:07 AM
From: Arthur Tang  Read Replies (1) of 435
 
During the summer vacation period, things are quiet; Wall street wants Greenspan to lower some more on the interest rates? Look at Japan, running close to zero interest rate, had no fix on their economy, and no improvement is ever in sight. So is it going to be interest rate that can fix the slow down in the economy?

The problem was that FEDs had no idea what they are doing; and therefore, we can not rely on them to fix things.

The lowered interest rates were not pushed by Banks to customers. If no one borrows, how can the economy improve. No new money is used to pump the economy. FEDs had to get banks to be more aggressive to loan out to their customers.

On the other hand, businesses are reducing head count(less cash needs, therefore no need to borrow) to take advantage of productivity improvements in the past year. They are also writing off good will to get tax refund from the government. These actions are planning for more profits in the near future.

As far as personal tax refund is concerned, the government is doling them out ever so slowly(1/10th of the total each week) that the effect on the economy is going to be zilch. Or as George H. Bush will say to his son, "Nada".

Patience will win out, but banks have to feed the economy is the last word.
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