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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Stock Farmer who wrote (49375)12/8/2001 12:54:15 PM
From: BirdDog  Read Replies (2) of 54805
 
This begs the question "why is there a lack of business spending".
It's not because consumers reduced their spending, it's because consumers didn't increase their spending enough to make businesses profitable!!!

I beg to differ. If you remember back in June of 2000. When Greenie increased rates by 50 basis points. I think that was to send out a message to companies. That message was: You will quit spending on IT. You will offer up those high flyers in the NASDAQ as a sacrifice to the economy. This is because we fear the great wealth and spending their stock values have created. And if you don't stop your spending, we will increase rates till you are yourself destroyed. This is because we cannot tolerate economic growth at this rate. Companies cut IT spending drastically. By late winter 2001, IT companies were saying it was as if customers had closed the door. It was as if they just quit spending on anything. The whole thing was due to fear.

Then, when the stock market kept dropping. Consumer spending increases did drop off. This is because the people didn't have their investments doing great. They didn't feel as though they could spend and not worry about saving more of thier income. They also had stopped spending extra growth in their savings.

The whole thing is a domino effect based on fear. Fear of the Fed. destroying the economy. Now they are trying to reverse the domino effect. They better keep working their hineys off. The government started it.

Don't ever forget those famous words from Billy bob Clinton. At a news conference. Just a few days before the Feds. first surprise rate cut in Jan. 01 . While pointing at a chart he said: "There's nothing wrong with the economy." With his famous finger waving at the camera.

BirdDog
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