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Politics : Ask Michael Burke
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To: sammaster who wrote (59791)5/19/1999 7:42:00 PM
From: Freedom Fighter  Read Replies (1) of 132070
 
Sammaster,

I "suspect" several things about what's going on in AG's head.

He knows that the U.S. financial system is a highly leveraged bubble and he doesn't want to raise rates because he might burst it.

He especially doesn't want to do it now because most of Asia is still reeling, Europe has slowed down, and Latin America is choking. Meaning that the world can't afford for the U.S. bubble to burst yet.

My guess is that the asset quality of a lot of banks and dealers world wide is poorer than we are being lead to believe. During the height of the crisis last year a lot of stuff was just rolled over and other debt had its maturity extended so no one had to recognize the fact that they couldn't pay. It was an effort to buy time. There are also all sorts of credit derivative issues that no one has a firm grip on. It's hard for me to believe that with what happened in Asia and Russia, that everyone is good for what they say they are - IMF bailouts or not.

He's hoping the bond market cools both the "real" economy and the growth of the bubble without blowing it up so he doesn't have to do anything.

He knows he will eventually fail so he wants to get out of the Fed before it blows so his successor will get the blame. (see Rubin)

Wayne
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