Agreed. If Russia unable to finance its vast base metals operation
(nickel, aluminum)that it regularly dumps on the market than those will likely skyrocket no matter what...
On a separate note it looks like Greenspan is now treated by market more like Mr. Yen-largely ignored..certainly not like "Irrational Exuberancy" comment, where in fact he might be much closer this time...
Greenspan gloomy over Asia, warns on stocks
04:58 p.m Jul 22, 1998 Eastern
By Caren Bohan
WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan on
Wednesday said the economic crisis raging through Asia did not seem to
be abating yet and repeated a warning about high U.S. stock prices.
On the second day of key testimony to Congress, Greenspan sharpened his
remarks about the severity of the Asian crisis.
''The evidence we have to date as of yet shows no evidence of
stabilization,'' Greenspan told a House banking panel. ''The recent data
still exhibit deterioration.''
His comments were made during an appearance on Capitol Hill required by
the 1978 Humphrey-Hawkins law. The testimony exacerbated a sell-off in
the stock market that already had been sparked by weakness in technology
issues.
The Dow Jones industrial average closed down 61 points at about 9,129.
It was the second day in a row that stock investors reacted negatively
to Greenspan's remarks, an outcome that some analysts suggested the Fed
chief might not find unwelcome.
Referring to a big run-up in stocks over the past few years, Greenspan
said that, judging from past developments, the market may be ripe for a
sell-off.
''Ultimately history tells us that there will be a correction of some
significant dimension,'' he said, but added that it was not clear when
that would occur.
U.S. stocks weakened Tuesday when Greenspan, addressing the Senate
Banking Committee, made clear the Fed might raise interest rates if
inflation seemed in danger of heating up.
He did not back off from such remarks when addressing the House panel
Wednesday, although he emphasized the Fed might not need to move
interest rates because healthy growth with low inflation was the most
likely outcome for the U.S. economy.
''The most probable outcome ... is that we are going to get a
continuation of what is really quite a remarkable and benign economic
environment,'' he said.
But Greenspan said if the economy did not slow of its own accord and
wages accelerated faster than productivity growth, ''then other actions,
mainly monetary policy, may have to be involved'' -- a thinly veiled
reference to a possible rate rise.
Greenspan made a plea to lawmakers to approve money for the
International Monetary Fund, saying it was needed for efforts to rescue
battered economies in Asia and elsewhere.
The IMF has been under fire for its management practices by many members
of the Republican-dominated House who have delayed approval of its
funding.
Greenspan acknowledged such criticism, but said he knew of no
alternative to the IMF to help Asia improve.
''I think that the IMF has done as much as it thought it understood it
could do,'' Greenspan said. ''I don't know what alternative policies
could have been implemented which could have significantly altered the
pattern that emerged once the vicious cycle began to accumulate to the
degree that it did.''
Copyright 1998 Reuters Limited. All rights reserved. |
