Clown-Free Zone... sorry, no clowns allowed Message Board

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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: ild who wrote (141548)	1/4/2002 3:13:55 AM
From: patron_anejo_por_favor	Read Replies (2) of 436258

I disagree with Roach...lower the Fed Funds to 1.50 or below and you'll create an enormous dollar-euro carry trade, tanking the buck. The larger problem is with capital spending due to overcapacity created by the bubble, NOT excessively high short or long term rates. The markets need to clear. I'd leave the rates where they are, consider across-the-board tax cuts (including for businesses), reinstitute the long term bond in order to help fund the expected deficits (by selling the bonds when they're expensive, try to soften the blow) and hope for the best. I'd be expecting 18-24 months of worsening recession before we get there. I'd also reform banking laws to require greater disclosure of banks loan portfolios and hold hearings on curbing derivative use. That will be necessary to speed recognition of bad loans, 'cause all signs point to the US following Japan closely over the next several years if we don't prepare for it. Interest rates are a VERY peripheral issue here, so focusing all your energy on them ignores the larger structural problems in the economy.

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