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To: Cynic 2005 who wrote (45273)	6/7/1999 9:16:00 AM
From: Lucretius	Read Replies (1) \| Respond to of 86076

so what are we buying calls on this morning for the run to new highs -s-

To: Cynic 2005 who wrote (45273)	6/7/1999 9:47:00 AM
From: BGR	Respond to of 86076

Mohan, I do not think that curing stupidity on part of the banks falls within the Fed's charters. The Fed is chartered to control money supply in the economy and take the actions necessary to bring the real money supply (which the market controls) to the level that it prescribes. As for risk management on part of the banks, I believe that banks are largely free to set their own personal guidelines (as they well should in a free market, or we have a Soviet style situation). The Govt. does set guidelines as to how much capital banks must hold against their loans adjusted by risk ratings, but the Govt. is not in the business of setting these risk ratings. Now, it is quite true that if the Fed feels that the economy is overheated, it should cut down money supply even at the risk of recession. It did just that earlier this decade, the (short term negative) effects of which on the economy - so claim some - had a considerable effect on the next election. So much for the political influence on the Fed, which is only supported by baseless insinuations (based on private personal experiences, but sources cannot be divulged ;-)) by conspiracy theorists - so it seems to me. Does this mean that the Fed is always right? Far from it, it is composed of a group of fallible humans and makes errors. One of the errors, I believe, is the level at which margin requirements are set. That should be tightened, as that is being used only for speculation and little real business purpose. But is the Fed bought? Please!! Given that unemployment is very low, I am not sure I quite understand your statement about the economic situation. Do you mean to say that the economy is not in fact creating as many jobs and wealth as Govt. reports indicate that it is doing? If that is true, perhaps rate cuts are in order? <VBG> I urge you to continue the discussion, in any case, even if we do not agree. -BGR.