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To: goldsnow who wrote (42994)	10/14/1999 10:14:00 PM
From: C Hudson	Read Replies (4) \| Respond to of 116762

I believe a crash may actually occur. The following story is ENORMOUSLY important. Greenspan is acknowledging a potential crash. The PPT must be out of bullets...... WASHINGTON, Oct 14 ( Reuters ) - Federal Reserve Chairman Alan Greenspan on Thursday advised banks to set aside more money as insurance against a big market downturn, a sign he is concerned about a potential bubble in equity prices. While emphasising he was not predicting a stocks crash, Greenspan told a banking-related conference that sudden losses in investors' confidence ''will inevitably emerge from time to time'' and said financial institutions should boost their reserves to account of that possibility. He said diversification among different types of assets -- a common strategy used by portfolio managers to guard against market risks -- may not be sufficient to account for all types of scenarios in which the value of their investments might decline sharply in value. ''At a minimum, risk managers need to stress test the assumptions underlying their models and set aside somewhat higher contingency resources -- reserves or capital -- to cover the losses,'' he said. The Fed chairman noted that equity premiums -- the amount of return investors demand to cover the risks associated with investing in stocks -- had declined in recent years but he said it was unclear why. ''The key question is whether the recent decline in equity premiums is permanent or temporary,'' he said. If the decline was only temporary then portfolio managers may find they were underestimating the credit risks of individual loans and could be too optimistic about how protected they were by spreading their risk. He said investment professionals who specialise in risk management should take this factor into account and weigh carefully whether investors' were not paying enough heed to the risk associated with holding stocks. ''The decline in recent years in the equity premium ... should prompt careful consideration of the robustness of our portfolio risk-management models in the event this judgment proves wrong,'' he said. Greenspan shocked financial markets in December 1996 when he asked whether U.S. equity prices were affected by ''irrational exuberance.'' Since then he has repeatedly questioned whether the prices of U.S. were justified by corporate earnings. But the Fed chairman, who was sharply criticised for appearing to second-guess investors with the famous 1996 comment, has in all of his discussions of the stock market since then been careful to be more circumspect. In Thursday's speech, Greenspan noted that economists had failed to anticipate sharp reversals in market confidence. He also repeated his line that the prices of assets were determined by millions of investors, ''many of whom are highly knowledgeable about the prospects for the specific investments.'' 20:41 10-14-99 Copyright 1999 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

To: goldsnow who wrote (42994)	10/15/1999 12:49:00 AM
From: Alex	Read Replies (2) \| Respond to of 116762

Mundell on gold today............... <<Amidst all the silly talk about the euro making gold obsolete for European central banks, with predictions they will sell it and send its price plummeting, Mundell introduces a note of caution (a stick) and a word of promise (a carrot). Now we see him sneaking gold into the euro. "It would be a mistake to think that Europe?s interest would lie in dumping large stocks of gold in a sell-off. None of the big holders have any interest in depressing the price of an important reserve asset. But Europe may find that its gold holdings have a hitherto unnoticed use in building confidence in the euro." Yes, the euro eventually will be a great currency, taking its place alongside the Roman denarius, the pound sterling of the British empire, etc., as Mundell gushes forth praise. Alas, "It is also necessary to note, however, that the euro will have two unique weaknesses compared to its great predecessors. First, the euro starts out as a pure fiat currency not linked to gold. Second, the euro is not produced by a strong central state. These weaknesses would be potentially lethal were it not for two mitigating factors: Europe?s large gold reserves will help to overcome the first weakness. The second weakness will be overcome in the short run by the military alliance of NATO and in the long run -- perhaps -- by European political integration.">> polyconomics.com

To: goldsnow who wrote (42994)	10/15/1999 6:40:00 AM
From: long-gone	Respond to of 116762

<<Following Greenspan's comments, U.S. stock index futures plunged in after-hours trading. December futures on the Standard & Poor's 500 Index fell 15.00 points to 1275.00. That's about 1.4 percent below ``fair value,' taking into account dividends, the>> I find it interesting that only yesterday late, Elaine Garrazaralli(sp?) was on CNBC stating some TA stuff related to how DOW had bounced firmly off prior lows. Now, Greenspan shoots this analysis in the foot and market is set to break well below prior lows. The "game" is getting fun & seems like a new game is afoot with the long bond above 6.30%.