Sankar
IS GREENSPAN PRIMING THE SAFETY NET FOR A STOCK MARKET SOFT LANDING?
Re: <<* The BOJ is SMART. I was surprised to learn this. But, Japan being the second largest economic powerhouse, I should have expected this: They have recently made a mutual PACT with the Federal Reserve Bank of NY to let them have US$, obviating a need to liquidate their US Treasury security holdings.>>
I don't think it is this simple. The BOJ may have made a good move but they owe somebody something here. Is it possible that in exchange Greenspan and the Fed get some control over the how fast the Japanese sell US securities and treasuries so that a slow, controlled retreat of the market can be engineered (they hope?) over several months (more than 1000 points since it was that long ago that Greenspan first said the market was over valued). Possibly a nice stabilizing plan. Other markets get the necessary propping up they need and ours gets the excess cut out with a minimum of pain ( as Greenspan would like), if the engineering works. I might even trust and go with Greenspan on it, if it was totally under his control, because he does understand as well as anyone the complexities of the global situation and the range of benefits and necessary prices which must be paid (as indicated in the speech bearshark brought attention to). But I am not sure it can be done. Among other things, standing in the way are the ego's and deceptive habits of high level politicians (the Presidents, Prime Ministers, etc. and the Ministers of Finance, Secretarys of the Treasurys, etc), who must come to agreements and trust each other (ie as the group now meeting up in Vancouver). These guys are the ultimate professional talking head spin doctors who are used to doing their thing with thier own audience. Can anyone of them, knowing their own skills so well, believe anything they hear from each other? Especially when many of them may very well still be trying to keep a cover on problems and scandals they know about nevermind wondering what they, themselves, don't yet know about and may be about to get broadsided with. In addition, there are a host of legitimate, very serious, highly sensitive, very difficult to resolve, national and cultural issues at at play (such as was pointed out by yorself, the great [and not necessarily unwise] resistence of the Japanese govt to turn its people towards consumerism).
What mutual fund manager operating with integrity and free rein is going to be happy with staking current gains on these possibilities: 1) the chances that these guys can genuinely work things out and
2) that even if they do, the outcome could be a 1000 plus down, controlled landing over a period of months.
You and many others on the thread are more knowledgeable than me on the precise financial mechanisms through which such a scenario, if implemented, might be engineered but, clearly, controlled selling of treasuries (now somewhat under Greenspan's control?) could put pressure on interest rates and who could discount, having witnessed the recent mysterious and contrary fluctuations of globex futures, the possibilities of seeing equally mysterious nudges up begin to occur in the price of gold?
Larry |
