Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Razorbak who wrote (87608)	2/17/2001 8:50:08 PM
From: cnyndwllr	Read Replies (2) \| Respond to of 95453

Razorbak RE: <<And last, but not least, I have to confess that I have an enormous amount of confidence in Greenspan's abilities to navigate this enormous battleship, the U.S.S. Economy.>> I found myself agreeing with much of your post, including the confidence you have in the ability of Al Greenspan. The man is good but I cannot help wondering how he will be able to maneuver out of this box. In the past he has utilized monetary policy to shrink or grow liquidity to fine tune the economy and has used his own credibility with the financial community to talk up or talk down the markets in order to moderate movements that were beginning to get to far out of whack with the financial realities. When the economy grew more slowly than he wanted, or began to shrink, he injected liquidity through interest rate cuts, and that when it grew too quickly and outpaced capacity so that inflation was threatened he raised rates and reduced liquidity. Because this had worked so well, even his statements indicating where he might go next could affect the economy. What does he do when he has recession in some sectors with excess capacity and inflation in other sectors with no excess capacity. His past tools of using interest rates to fine tune the system will either cause more recession in some sectors (ie.manufacturing) if he reduces liquidity by raising rates or otherwise allowing liquidity to dry up, or will cause additional inflation in other sectors (ie. energy and real estate) if he increases liquidity and demand. If it is perceived that he has lost his ability to fine tune the economy through monetary policy, the crisis in confidence that results will be interesting to observe. It may be that we are at a crossroads where the cure is not monetary policy for a quick fix but rather a slower shift to allow the allocation of resources to energy and housing and other possible sectors that have not had time to respond to the rapid growth over the last few years. I think that will be necessary, I think that Greenspan probably sees that it is and I think that the longer he can keep confidence up and things moving along while the shift occurs, the better. I also think that he cannot afford to pump enough liquidity into the economy to bring the nas back near term and that there will be a lot of emphasis on creating more and cheaper energy through tax incentives or other means to allocate more resources to energy. That's why I have held onto my 30% osx holdings through the last 2 months or so (long term for me gg.) I don't want to get left behind when the sector runs, even if it means holding while it stairsteps down some. I think those are the reasons that I am probably less optimistic than you over the next part of this cycle. Ed