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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (75277)	2/6/2000 3:33:00 PM
From: yard_man	Read Replies (1) \| Respond to of 132070

I strongly disagree that demand will drop before stocks -- it will be the other way round. I think the dollar may be the first casualty and we may already be underway here.

To: valueminded who wrote (75277)	2/6/2000 9:17:00 PM
From: Earlie	Respond to of 132070

Chris: Good comments. I fully agree with you that much of the world, including Japan wants nothing more than for the "buyers of last resort" to keep on borrowing and buying. It is one of the few phenomena that stands between us and a depression even as we discuss it. Unfortunately, it has limits and they are being approached. Obviously it is a big concern for Greenspan. In fact, he voiced his views on this ("it cannot continue much longer") to G7 members last month. But this problem is small potatoes compared with Greenspan's major headache. The big problem (and it is a very new problem) is that even with the current rising rates, the global treasury market is in sell mode. No Fed chief has had to face this difficulty in recent history. While the U.S. debt is a non-entity to the average citizen (many of whom have no real idea just how big and dangerous that mighty sum is), it is nevertheless THE big concern of the Fed. Greenspan knows that much of the planet depends on U.S.borrowing-buying, which in turn depends on the market holding together. Yet he also knows that it is a bubble that must somehow be gently deflated before it blows. Obviously he would be loathe to prick it intentionally. But what does he do if t-bill selling really gets into gear? Investors hold debt paper only so long as they have confidence in it. Greenspan must do whatever it takes to maintain that confidence and keep it offshore. If it returns, it demolishes the buck, just for starters, which was my point,... he has little wiggle room on rates. In the absence of further facts, my bet is that he can't and won't reduce rates, unless the financial world is coming apart around him. It is for certain that the gold move on Friday speaks to this topic. It is also for certain that it gave Alan heart burn on the weekend. I also agree with your views as to why the Japanese are not terribly worried about the strength of the Yen, although they too are facing some very new and very big problems (like a sloppy and saturated bond market of their own). That will maintain that weakness for the foreseeable. As an aside, I suspect we are all going to start evaluating currencies against gold rather than against other currencies. Paper currency to paper currency, it is a case of choosing the lesser of evils. But paper currency to gold,....that's another story. (g) Best, Earlie