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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: Eashoa' M'sheekha who wrote (41827)	10/13/2000 3:05:03 PM
From: long-gone	Read Replies (1) \| Respond to of 42523

IT'S TIME FOR GREENSPAN TO RESCUE THE MARKET Friday,October 13,2000 By JOHN CRUDELE -------------------------------------------------------------------------------- IS the stock market getting set to crash? There's no Ouja board on my desk. But I do see a few things that'll have to happen in order to avoid the chance of a full-scale panic on Wall Street. First, Alan Greenspan must step in and save the market if this slide is going to stop. And an active rescue effort is the simplest and most effective way out of the equities market's current predicament, although it is also extremely dangerous and controversial. Greenspan must get the Treasury to buy futures in the Dow and S&P indexes this morning if those indices continue to decline. A further drop is a very real possibility, especially if the nation's Producer Price Index for September is worse than the 0.5 percent jump that the experts expect. A Fed official back in 1989 suggested that buying index futures - rather than pumping liquidity into the banking system - was the way to avert a disaster. He knew what he was talking about. Second suggestion: The Fed has to stop making covert attempts to help the market, as it did this week. That effort, like past ones, failed miserably when Greenspan added liquidity to the banking system on Tuesday by doing billions in so-called repos and coupon passes. The more the Fed fails in these secret efforts, the less confidence people will have in its ability to avert disaster. The Fed's goal here should be singular - step in front of the troubled market so that investors know a rescue effort is in place. That's what the Fed has done in the past for several large Wall Street firms, and small investors deserve no less. And the timing is very important. Greenspan has to stop the bloodletting before small investors lose the faith they've had in stocks these past 10 years. If prices continue to dive like they did yesterday, small investors will not only lose faith; they will panic. Then there will be a crash. Americans have entrusted more money to Wall Street than ever before. Retirement, college, vacation plans, home-ownership goals - are now all riding with the stock market. There is no room for error. No time for cute solutions. No more second chances. This column warned its readers at the beginning of the month that October was not to be trusted, especially when stock prices were still in bubble territory, and people had become downright complacent about the past record of crashes. And I even warned you that the Clinton administration's politically inspired dip into the nation's Strategic Petroleum Reserve might lead to unexpected problems - like increased Middle East tension just as we were getting nearer the presidential election. Am I psychic? No. (cont) nypostonline.com