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To: NOW who wrote (64453)	2/2/2001 9:38:52 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 436258

Noland levels some blasts at the Maestro, Kudlow and Rukeyser in today's Credit Bubble Bulletin: prudentbear.com As such, I am compelled to comment on CNBC’s Wednesday afternoon panel discussing the Federal Reserve rate cut. Two of the great propagandists of this historic bubble, Louis Rukeyser and Larry Kudlow, made up half of the panel. Both sit firmly at the top of my list of individuals that I fully expect to demonstrate a propensity and raw talent for obfuscating the facts going forward. Not surprisingly, they are vocal leaders of the popular bandwagon chastising the Federal Reserve, blaming last year’s rate increases for the sinking NASDAQ marketplace and the current economic downturn. Such analysis is a blatant distortion and a disservice to the public. The Federal Reserve’s error was not that it increased rates last year, but that it failed to aggressively tighten policy much earlier. Speculative bubbles always go bust, it’s only a matter of from what extremes and the degree of financial and economic damage. Greenspan himself recognized dangerous speculative bubble dynamics at least as early as 1994 but, regrettably, never squashed these destructive impulses before they gained momentum and a very powerful constituency. I will give the Fed the benefit of the doubt that it was appropriate to cut interest rates to 4.75% during the LTCM crisis in the Fall of 1998. However, a major policy blunder developed when these cuts were not fully reversed for almost one year, despite a booming economy, heightened inflationary pressures, ballooning trade deficits, increasingly conspicuous financial and economic distortions, and a grossly speculative stock market. The Fed should have moved forcefully to tighten policy (and warned against speculation) to temper what were clearly unmistakable signs of an unhealthy financial and economic bubble. Moreover, the unprecedented accommodation going into Y2K was a bizarre and most unfortunate occurrence, sowing the seeds for a final historic speculative fiasco. The fact that the Fed attempted to rein in some of this extreme accommodation last year is certainly not the culprit of the inevitable collapse of this speculative bubble. To claim otherwise is obfuscation. Mr. Rukeyser and Mr. Kudlow spend a lot of time pontificating publicly about the stock market, but I don’t remember many responsible comments warning viewers in the midst of the frenzy of the danger of wild speculative excess.