Haim, for a change, I disagree with you. The only fault you can find in AG's recent actions is the timing. He timed the reduction in rates to avoid a break in the equity market. The rate the FED's have (both) are still quite high relative to the inflation rate (both trailing and forward). Thus, as I have said last year at this time, the FED left itself enough playing room to intervene with interest rates and have that intervention have the desired effect, namely, prevention of a melt down of the equities market. I do not view that as a crime, I view that as smart timing, which I would expect from AG and Rubin.
A collapse in the equity market could have resulted in a collapse in consumer demand, a major engine of our economy, and if that were to happen, the developing countries would have had no chance for recovery. The timing on October 15th, naturally was manipulative (almost matching H-K actual buying of stock in their market), but as long as AG did not profit from that personally (and I think all his money is cloistered with no ability to trade at all), I see no crime. by correctly timing the last rate decrease to have maximum effect and momentum generation in the markets, he leaves himself ample room to play that game again, if needed in the future. One of the reasons I have turned much more bullish, is that Greenspan has signaled that he will do what is necessary to prevent Armageddon. He is going for a soft landing, and I thin he'll get what he striving for.
Mind you, that also means, IMHO, that our equity market is likely going to be bound between 5000 and 10,000 for quite a number of years here.
Zeev |
