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To: FR1 who wrote (447)	4/15/2000 9:14:00 PM
From: w2j2	Read Replies (1) \| Respond to of 1805

Franz, Going back several years, Greenspan has been worried about " irrational exuberance" now called "wealth effect". He has now solved that problem. Going forward, he has 2 big worries: The democrats will blame him for trying to beat Al Gore with interest rates. Unhappy investors will want a new administration that promises to cut taxes. 2nd, The tech sector, the growth engine of our economy, pays its employees largely with stock options. If the market tanks and stays there, the economy will take a big hit. I think he has to raise .25% in May. Otherise he looks like he was "after" the stock market, which is what he consistently denies. After that, he will wait and see till after November elections. This is a correction in an ongoing bull market. IMHO wj

To: FR1 who wrote (447)	4/18/2000 11:01:00 PM
From: Sweet Ol	Respond to of 1805

Sorry I could not respond sooner, I've been away. You have some interesting thoughts there, I need to cogitate on them a while. One thing I have been puzzling over for some time is the effect of the change from a capital intensive economy to a labor intensive economy. The so-called "new economy" is really very labor intensive, and the key is the quality of the labor, as opposed to the traditional labor intensive industries where quantity was about all that mattered. Interest rates have a big impact on capital intensive companies only if they are borrowing a lot of money. We have seen a lot of our "old economy" companies salting away cash and paying down debt for the last couple of decades. The new tech companies use equity instead of debt. I suspect that these two factors are the main reason why AG's interest rate tools don't work very well any more. I bet if the truth were to be known, the Fed is just as clueless as we are as to why the economy is so slow to respond to rate hikes. Best to all! JRH