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Strategies & Market Trends : Asia Forum

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To: Ramsey Su who wrote (6632)	9/24/1998 11:53:00 AM
From: Henry Volquardsen	Read Replies (2) of 9980

Ramsey, I don't think Greenspan has been months behind at all. In various comments he has outlined what he believes needs to be done to address the structural reforms required in the emerging markets. But at the end of the day he has no authority to present those as the views of the The US government, that is the Treasury's job. All he controls is monetary policy and it is arguable wether he should have cut rates before now. Also he has to be very careful how he expresses himself in public. We have both seen how the market hangs on his every word. If he had made more alarming or forceful comments on the situation before there was any a consensus among policy makers he would risk creating a panic. FWIW I don't think there is a major risk of a significant recession in the US. A slowdown yes, and that in and of itself is enough concern for the emerging markets. A rate cut of the magnitude you are suggesting would be, imo, disastorous as it would cause an even worse asset bubble. That ones deflation would be even more damaging. Henry

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