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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Captain Jack who wrote (89421)	2/1/2001 12:23:56 PM
From: MeDroogies	Read Replies (1) \| Respond to of 97611

This is what I pointed out to HIO last night: I don't believe he walks on water. However, authority is something that is earned by performance and consistency. AG has both of those things under his belt, in spades. As a result, his authority should be treated with the respect he has earned over the years. Has he/did he make a mistake? I think he did, but I don't see that it bears much on the equation. Based on all post analysis, it appears he made a pretty good decision. A tad overzealous, but the nice thing about monetary policy is that all mistakes are temporary, if handled properly. I disagree with your assessments regarding the economy when the last increase was made, and I disagree with it now. There was no slowdown in 2nd quarter, as 5.6% growth was occurring, and inflation was rising at a very rapid (current history terms) pace. That means his decision (which, btw, isn't JUST his) was probably well placed. There were NO signs of a slowdown. Currently, the "slowdown" (which is only a severe one because 5.6% is unsustainable, and having a period of low growth during a boom is a good thing) IS very evident based on layoffs and missed profit projections. Neither of these are specifically related to interest rates, however. Is there a correlation? Sure, but not as much as you'd like to believe. Are things picking up? Probably by 3rd quarter...but only because action was taken now. Remember, the Fed has to try to ACT before something happens, not AFTER it happens. If they waited until we hit 5% inflation with 6% growth, it would be too late. An inflationary spiral would begin despite rate increases, and growth would contract dramatically. By taking the steps he did, he helped to prick the bubble and ease the market into a more sustainable mode (I use HE in the sense of the Fed as represented by AG). In addition, he reduced inflationary fires while shocking an overheated economy into submission. In balance, he has created a situation where a soft landing is very possibly going to happen.