To: HairBall who wrote (28534 ) 10/6/1999 11:45:00 AM From: TRINDY Read Replies (2) | Respond to
LG and all--I read the Economist piece about Greenspan and the bubble economy last night, which combined with yesterday's action gets me thinking that only external-to-US forces have any potential of pricking this bubble. The Fed has fully bought into moral hazard. They will protect equities in case of a crash and do nothing to instigate one. That is, until their hand is forced. Only higher interest rates abroad will force their hand. The US is already trying to force Japan to relax any semblance of restraint on their monetary system. Japan is already in a liquidity trap and can do little to help themselves by lowering interest rates below zero. The only thing that can take this stock market down is conservative practices by european central bankers, keeping interest rates up and the euro strong. That will force the Fed's hand. Interest rate increases in the US will be necessary to keep the dollar from deteriorating. If, indeed, the european central bankers begin to imitate easy Al, look out above, it's melt up time.
