Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: TobagoJack who wrote (16796)	3/19/2002 3:44:50 AM
From: Maurice Winn	Read Replies (3) of 74559

<...Several analysts said Fed Chairman Alan Greenspan was probably foreshadowing such a switch when he declared in Senate testimony on March 7 that an economic expansion was "well under way."> Jay, Uncle Al will give a 0.25% interest rate rise tomorrow citing an extraordinarily fast recovery around the world. He has an eye on 'around the world' because he sees his job of protecting the US$ as being an international leadership job, not a xenophobic parochial US steel industry nationalistic protectionist issue. He will see the post-cusp 20.02.2002 triple-witching escape above the event horizon and subsequent rampantly good news as a dramatic warning that interest rates are likely to have to climb as rapidly as they fell to avoid a crazed irrational exuberance as people buy the recovery to avoid multi-decade low interest rates. Uncle Al has to get interest rates back up to get people happy to hold dollars, avoid a reprise of the irrationally-exuberant telecosmic wealth effect and accelerate savings which he has stated is an essential part of robust economic recovery and development. Perversely, the first couple of interest rate increases will drive markets crazy because all doubt about recovery will be thrown overboard. People will buy shares flat out! As interest rates cruise through 5% later this year, markets will settle into sensible relationships and Uncle Al will have successfully navigated through the craziness of the last 4 years. That's my theory! We'll know tomorrow. Mqurice PS: I'm glad to be out of Global Crossing - much more relaxed now.... ready to buy in case my theory is all wrong. Still gold free - I feel sorry for the naive Arabs minting a bunch of silver coins.

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