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

To: tradermike_1999 who wrote (1148)	12/3/2000 6:52:33 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 74559

what can Greenspan do to prevent any economic turmoil and make it so that things will sail smoothly? Resign and take Al Gore with him... <VBG> It's pretty apparent to me now, and has been since summer (for some of the gurus I listen to), that Greenspan overdid the rate hikes. AG seems to be worried about wages being too high. However, part of the problem is that skill requirements are climbing and the supply of such skilled workers declining. One way to alleviate such a problem is for AG to strongly push for congress to drop immigration quotas for skilled labor(in addition to govt incentives to retrain displaced workers in new skillsets). Such wage levels increases have been accompanied by relatively benign price inflation in basic commodities (minus oil which under the control of a monopoly). Thus, one can draw the conclusion that human resources are beginning to outpace material resources as the source of economic growth. So AG is targeting the wrong indicator, imo. Wage inflation cannot decline if the supply of labor is made artificially scarce. Make such labor available and wages should stabilize overall and track commensurate with productivity increases. One more problem that AG faces is that we're currently in the midst of a baby boomer saving boom (yes, that's correct... savings). But unfortunately current statistics seemingly fail to take stock investments into account when tracking savings rates. Americans are saving more than ever before, but most of it going into IRA, 401Ks, and other pension plans. And that same demographic boom has created the incredible money flow that has been looking for a reasonable rate of return, primarily in stocks. Now if AG thinks he has to hike interest rates to the point where people are willing to hold debt over equities in their portfolios, he's sadly mistaken. People understand stocks (to an extent), but bond valuation models are generally beyond most people's understanding, with exception of rate yield. So now we have trillions of dollars worth of cash building up on the sidelines looking for a place to call home. trimtabs.com And since overseas markets still are dependent upon US economic growth, I just see where they will become attractive until their economic productivity and restructuring yields results. Your turn... <VBG> Regards, Ron