Ask Mohan about the Market Message Board

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Pastimes : Ask Mohan about the Market

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To: Elllk who wrote (11115)	12/12/1997 9:44:00 AM
From: Tommaso	of 18056

"Easy to blame Greenspan but Hoover who got the blame for 1929 spent a lot of 1928 and 1929 trying to talk the market down to no avail. There is only so much these guys can do." Well, I would not want to trade places with Greenspan and I think in most respects he has done a fine job--though Volcker was even better and set things up for him. But the Fed does have the power (which it did not have when Hoover was in--and which Presidents don't have anyway) to raise the margin rate from the current 50%. I think he should have tried to get the Fed to do that. As far as I know there's been no effort in that direction. Maybe it wouldn't have prevented speculation, but it couldn't have hurt to try. That what the power is for. For a long time it was set at 100% and sources of funds going into stocks were scrutinized carefully. No bank was supposed to lend you money if they knew you planned to put it into stocks. Or--not to Monday morning quarterback him--I think Greenspan should push for an immediate raise to 75% margin, now. If he doesn't, the money that's being created to ease the pinch on banks around the world may just inflate the stock market further, leading to a bigger crash. Or so I think. Just guesses.

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