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

To: Skeeter Bug who wrote (87511)	12/23/2000 6:15:46 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 132070

you mean the super tanker us economy is beholden to one hedge fund? It was certainly the primary factor that caused other large hedge funds to take major hits and eventually quit the markets as well (eg: The Tiger Fund, Quantum Fund.. etc). I'm looking at one major macro-economic theme here Skeeter. The US has been carrying the rest of the world's economic water for several years now. Due to poor transparency in foreign financial institutions and masses of bad debt overhanging our competing economies, there just has been few places of relative safety for global investment dollars to migrate to. So maybe I'm missing something here, but the reason the US has tried to maintain a strong dollar is because we're trying to provide an economic buffer for other nations to get their act together so they can take some of the pressure for maintain economic growth off the US. They only thing holding nations like Japan out of depression is the ability to export to our markets. When those exports slow, their economy will likely slump as well. The US GDP currently is around $10 Trillion of the approximately $25-30 Trillion global GDP. That's around 33% of total economy, and still less than the 50% of global GDP the US held at the end of WWII. Consequently, when fully 1/3 of the global economy slows down, so will the rest if it is dependent on exporting to that 1/3. why is that you complain about bad policy on the way up, but not the way down? I'm not complaining about it either way, with the exception that I think the Fed has a duty to send out a firm signal that reverses the one they've been sending all year long, namely that they would like to see the US go into recession. They may not say it directly, but their actions have made it all too clear by overdoing the rate hikes in the face of obvious signs the US economy was slowing. Additionally, rising fuel costs, not due to a weaker dollar, but because of OPEC's monopolistic machinations has acted as an additional brake on economic growth. With energy costs acting as an effective depressant on economic growth for months now, the Fed should have lowered rates this month, and probably last month (but the election morass prevented any such likelihood). Now, however, with the election problems, the bursting of the internet bubble (which we all knew would eventually happen, albeit hopefully not as quickly as has occurred), skyrocketing natural gas and electricity prices due to a p@ss-poor national energy policy, I hardly think maintaining US interest rates are justifiable. Lot's of people worry about an exodus of capital from the US if the Fed lower rates. However, I still believe any such flight will be temporary simply because economic potential is not as enticing overseas due to structural problems. Bottom line Skeeter, 12 months ago AG was all about trying to soothe nervous investors who could have created a self-fulfilling prophecy by causing a Y2K financial crash. But AG flooded the system with liquidity, made everyone feel comfy and maintained a positive psychology. But as you will note, right after Y2K, AG was decreasing liquidity and reaching the top of the rate hikes. So now we're around 1% real money supply growth as opposed to 16% reached last year. He got us drunk on liquidity, and then suddenly made us go "cold turkey" and we're having serious withdrawal symtoms that we wouldn't have to go through were he to give us a little economic "methadone" to tide us by until he finishes getting us back on an even keel. That's my only gripe about AG, Skeeter.. That he has exerted more pain on investors than he needed to. Folks got the message when the Nasdaq broke below 3,000, and certainly when it broke through 2,500 as artificial tax events created an impetus to sell. Almost everything else AG has done over the past several years with regard to trying to keep the global economy afloat, I have agreed with. Regards, Ron