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To: pater tenebrarum who wrote (59062)	1/18/2001 1:28:11 AM
From: jj_	Read Replies (1) \| Respond to of 436258

well to quote the stroke he said "rumblings about the beige book manufacturing numbers" "the fed may have cut quickly because of one of two things. Either they saw the economy was getting very bad very quickly or they we're reacting to a outside force. If it's the economy itself it's actually worse and the beige book made people step back. He said it's like "searching for Sasquatch"...like when they we're "melting down their noble prizes to meet margin calls" -I think what he was saying is we'll find out in the next few days whether it's a outside force that may cause temporary capitulation or something longer term...but Alan Greenspan isn't going to come out on the steps and say oh by the way we're reacting to a hedge fund may be imploding or the Governor of California going to Alan Greenspan who last time he checked doesn't have a degree in thermo dinamics there's probably something economic about it...

To: pater tenebrarum who wrote (59062)	1/18/2001 7:41:08 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 436258

Heinz, did you ever get a chance to put up comments regarding Epstein's comments on Grant's hedonics pieces in Barron's? As you recall, he was rather critical of Grant, especially considering that Grant was a former Barron's writer. On the other hand, Grant's arguments are not really his own original arguments, but the arguments of Medoff and Harless. It may be that those two are able to state their case better than Grant could, despite the latter's gifted quill. In any case, I'm curious about your take on Epstein's claim that hedonics only accounted for 0.3% of the GDP figure. If that is true, then one could say hedonics is incorrect but its effects are negligible (at least on a 6% GDP figure). See link below, as well as the replies. That technique is called "chain-weighting." It means, in effect, that where prices are rising rapidly, the weight gets bigger, because more money is being spent. But when it comes to computers, prices have been declining, so the weights have been falling in tandem. The critics have been making the fatal error of performing stage one on the computer sector, but not stage two. (The Bundesbank economists probably made the same mistake.) So, for example, they will calculate that hedonically driven computer output soared 59%, year-over-year, in the second quarter, and then they'll assume that all of that increase went into GDP growth. Hence, they'll say, the role played by those gadgets has been looming way too large. But they forget stage two. Owing to falling price indexes in this sector (which, to compound the irony, have been falling all the more because hedonics are being used), that 59% gets a relatively small weight. In fact, computer hardware and software together contributed just 0.9% of the six percentage points of second-quarter GDP growth. At most, hedonics counted for about a third of that, or 0.3%. Message 14355737