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Strategies & Market Trends : Technical analysis for shorts & longs

SPY 683.83

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Dec 3 4:00 PM EST

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To: Johnny Canuck who wrote (35471)	12/8/2001 10:23:33 AM
From: j g cordes	Read Replies (1) of 68581

Greenspan's fiscal tolerance seems to be on prosac. At some point in the near distant future we'd normally see a contracting of Fed liquidity shrinking the optimisms of a rebounding economy. But contracting money supply would kill the goose. The first economic truism to fall during the 90's was that an economy couldn't run on low unemployment without creating inflation. The technological accelertation of productivity allowed this. Greenspan advanced his own surpize that this was even possilbe. Now a second economic truism faces Greenspan.. can historically excessive levels of liquidity be left in the financial system as the emergency causes for putting it there subside? The benefits of extremely low unemployment and a fast paced economy are no longer icing on the cake.. government has quickly ASSUMED the cash flow WILL ALWAYS be there and adjusted its budgets UP. We are spending as if we were still in a hot economy with low unemployment. The only thing sustaining appearances is Fed liquidity.. and cheaper oil. Debt is not being paid off, its simply growing at lower interest rates. To balance the books.. one or more of the following must occur: _ call in the liquidity _ increase productivity _ increase employment _ rev up consumer spending _ rev up international trade _ keep a lid on oil prices _ reduce consumer debt _ lower government spending Quite a challenge to meet even two of these.. Jim

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