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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Stcgg who wrote (129)	10/24/2000 3:22:43 AM
From: Erik T	Read Replies (1) \| Respond to of 74559

Stcgg, that would be a rational evaluation, and one which I believe is correct. However, Greenspan has come to the rescue with abundant liquidity and lowering the cost of money for "threatening" events such as the Asian crises and the bailout of LTCM. I read an SEC publication evaluating the 1987 market break, and the one conclusion they came to was much of the damage could have been prevented with substantially more liquidity. Greenspan has taken that message to heart and he floods the markets with liquidity whenever something ominous presents itself. Now I recognize that a market crash is bad and the best we can hope for is an orderly decline in equity prices from what appear to me to be unsustainably high levels. However, I am not able to accept that Greenspan won't act again if the markets start plunging. And every time he has intervened he has worsened the "bubble." I could see it happening again, creating increased volatility, but perhaps an upward bias despite signs that a recession with coexistent accelerating inflation could be coming soon. Just thoughts to throw into the mix, Erik