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To: Jim McMannis who wrote (36804)	7/7/1999 4:42:00 PM
From: Bobby Yellin	Read Replies (1) \| Respond to of 116752

Hi don't think greenspan is as worried about inflation as he is about all the people's retirement money invested in the stock market bubble..I would think that the big players are laughing their heads at rubin and greenspan for making it possible for them to take so much so very easily.. of course my view from NY might have a huge bias..bizarre what I am noticing..a lot of immigrants and poor people have benefitted from this financial bubble..I can't tell you how many nail salons I see replacing other stores..(sort of reminds me of the elite romans who drank wine flavored with lead and then became sterile..decline of the empire...)also all the vaporware cellular phones and beeper stores etc..I guess most want to be connected to something in these weird times...also so very many nannies and so very many renovating their new apartments Since so many US corporations have used foreign laborers, and with the onslaught of mergers..it still seems as if the middle class is trapped in pushing that huge stone up a mountain...afraid to demand higher wages..and now with interest rates creeping up..maybe corporations after they float more depress which is depressing interest rates upward will probably start looking for more ways to cut costs..fire more people and hire more at lower wages.. again..my view from NY might be very stilted..(food prices in the city are very high..what will happen I wonder when commodities really start rising..also curious as to what part of business expense is energy.. I forgot when the buying starts for winter

To: Jim McMannis who wrote (36804)	7/7/1999 6:47:00 PM
From: Ron Struthers	Read Replies (3) \| Respond to of 116752

Free 4 month trial subscription to RSA Jim, you may be interested on my comments in the last RSA issue on Greenspan, IMO he has basically said if the market doesn't come off he will begin thrashing a needle at this equity bubble Hello folks, don't mean to intrude, I do drop by this thread now and then, thought I would offer this on a couple threads on stocks/metals RSA follows. This offer is open to anyone who has never subscribed to the newsletter before and is open to the first 50 who respond by e-mail to "mailto:resource@bmts.com" Please repond with full name as well as e-mail address I only ask that you have a genuine interest in the posibility of becoming a subscriber if you like what you see after a free 4 month trail. The newsletter follows resource stocks only, mostly mining plays (base and precious metals, some diamonds, PGEs) as well as oil&gas stocks, market and commodity analysis, as well as frequent e-mail updates. RSA believes a newsletter does not tell you how/what to invest but provides ideas and opportunities to act on, however the newsletter does follow a particular investment strategy to those interested and uses this to track buy/sell and performance (listed below). RSA Performance as of July 2/99 Current 12/31/98 Gain/loss Avg YTD Gain of current 46 RSA picks............ ....... +1.79% Gold London PM Fix .......... 263.10 ...... 289.50 .... -9.12% Handy Harman Spot Silver ............. 5.39 ........ 5.95 .... -9.41% Copper NY nearest future .............. 75.75......... 76.90.... -1.50% Toronto Gold&Silver Index ............ 5322 ......... 6379 ..... -16.57% Cdn PM Funds, 5 mths to May 31 ............... ............ -7.50% Vancouver Mining Index ............. 295...... 527...... -44.02%

To: Jim McMannis who wrote (36804)	7/8/1999 3:32:00 PM
From: Ron Struthers	Read Replies (1) \| Respond to of 116752

<<Greenspan sees it but will get behind the curve because>> Jim here is a few comments on my last issue on Greenspan etc. I believe the most important thing that has happened regarding the equity markets in a long time was Greenspan's testimony. Greenspan indicated that the biggest threat to continued prosperity was the equity asset bubble and if it does not deflate very soon he will start thrashing a needle at it. When the most powerful man regarding economic and monetary policy makes such a major change in policy we should listen carefully and act accordingly. Greenspan has taken a major shift in policy and it seems hardly anyone has caught on. The main stream press and Investment opinion is still fixed on the old and usual economic indicators, CPI, PPI, GDP and durable goods orders etc. while Greenspan is saying this is no longer the threat or what he is concerned with. The beginning of his testimony was saying the old economic indicators are less important and new ones are having more influence on the economy "many of the empirical regularities depicting the complex of economic relationships on which policymakers rely have been markedly altered" Greenspan then goes on to say how continued low inflation and good times, referred by myself and others as the 'Goldilocks economy' has induced and complacency for risk "such a benign economic environment can induce investors to take on more risk and drive asset prices to unsustainable levels. This can occur when investors implicitly project rising prosperity further into the future than can reasonably be supported" This newsletter has talked for some time on the inflation problem being 'asset inflation' and Greenspan's speech is riddled with such references. The Fed has singled out real estate and equity speculation as the main threat of potential destabalization. Greenspan talks about the labor market growing tighter and tighter and can't continue and this is being driven by a huge demand for goods and services. Labor productivity has not grown fast enough and in turn consumers have increased their spending by running down their savings. This has been accommodated by booming equity and real estate prices (bubble) that causes people to spend ever more and adding more pressure to already tight labor markets that will eventually lead to higher wages and inflation. "That last development represents an unsustainable trend that has been produced by an inclination of households and firms to increase their spending on goods and services beyond the gains in their income from production. That propensity to spend, in turn, has been spurred by the rise in equity and home prices," Greenspan is also saying brining an end to this asset bubble soon would be good timing, when the economy is strong. "Even if this period of rapid expansion of capital gains comes to an end shortly, there remains a substantial amount in the pipeline to support outsized increases in consumption for many months into the future. Of course, a dramatic contraction in equity market prices would greatly reduce this backlog of extra spending." Greenspan believes the Fed can control the consequences of popping the bubble and that problems following the bursting of the Japanese bubble for example were a result of the wrong policies following the 'pop'. "While bubbles that burst are scarcely benign, the consequences need not be catastrophic for the economy." Greenspan is trying to warn or prepare us for a stock market crash or big down turn. If it does not happen on its own, he will cause it. Hopefully it will be handled properly. "And certainly the crash of October 1987 left little lasting imprint on the American economy." Greenspan also says that now is a good time to have a stock market crash. "Should volatile asset prices cause problems, policy is probably best positioned to address the consequences when the economy is working from a base of stable product prices" "It is the job of economic policymakers to mitigate the fallout when it occurs, and, hopefully, ease the transition to the next expansion." This is how Greenspan ended his speech. Why would he end it this way unless he believed a fallout would occur. Will the Fed keep increasing rates until the a fallout occurs? I believe so, unless it happens on its own before hand. Tuesday's report that Consumer confidence has hit a 30 year high, all but guarantees further rate hikes. Basically the Fed believes the biggest threat to the economy is asset price inflation and they plan to reign it in The Fed raised rates 0.25% on Wednesday as expected but the market celebrated because of the surprise stance of the Fed changing from a bias of raising rates to neutral. I expect this change could have been because the markets have gone sideways and the bond market has been killed, already increasing market rates and/or the problems in South America that are surfacing. The Fed has also raised rates many times in the past from a neutral stance, possibly they are trying to create uncertainty or take the market more by surprise with the next rate increase. As usual it is always a guessing game what the Fed is up to.