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To: Steve who wrote (49241)	2/22/2001 12:46:13 AM
From: pass pass	Respond to of 77400

If your mutual funds, retirement funds, and 401k drop by 50%, then your home value starts to decline, you'll spend less. Our economy is counting on your dollar spending. It's that simple.

To: Steve who wrote (49241)	2/22/2001 1:16:56 AM
From: TobagoJack	Respond to of 77400

Hi Steve, no fight intended, only good fun, but let me spend my post-lunch minutes to take your message apart literally and figuratively. <<Greenspan's focus is the economy not the stock market nor any particular sector of the economy.>> What you say may be true, and can certainly be argued thus. Saving LTCM and the Commercial Paper market may or may not qualify as targeting the markets. However, when the maestro's minions meet on emergency basis to target the economy, as you say, the markets get hit, intended or not. <<However, lowering short term rates of interest will stimulate economic activity with some indefinite lag time.>> No argument there, the bears are simply saying that capitulation of the disorderly kind will occur before the indefinite lag time runs out. <<There is a high correlation between a growing economy and the appreciation of assets.>> As above, no argument there, except to add following corollaries (a) there is a high correlation between growing economy, growing asset value with growing debt, (b) growing debt with growing asset, in mutually enforced feedback loop, and with heightened risk (c) risk with danger, and with it, chances for something going kaboom (d) loudness of kaboom with deflating assets (e) deflating assets with unserviceable debt and thus deflating equity, and (f) finally, with the economy again. <<Beyond that circuitous link anyone who believes Greenspan is targeting the stock market for rescue is a fool>> Maybe so, but a richer fool that gets to live another day. Chugs, Jay

To: Steve who wrote (49241)	2/22/2001 3:04:54 AM
From: Hector	Read Replies (2) \| Respond to of 77400

Hey Steve, Re: "Greenspan's focus is the economy not the stock market" Did you ever wonder why the FED cut rates 50bps on 1/3/2001 at a time when many traders were out to lunch. Did it ever occur to you that consumer spending accounts for 2/3rds of the economy and maybe, just maybe, the disappearance of $5 trillion from stock portfolios may have had a negative impact on consumer psychology, thereby inflicting serious damage on consumer confidence and accordingly, spending? Wake up! The stock market has become the economy and the FEDS' insistence that it doesn't target stock prices, doesn't make it so. All indications are that's exactly what it's doing. The immense pumping up of the money supply and rapid reduction in short-term interest rates at a time when their fears about inflation haven't changed, were done for one reason. They were worried that the stock market decline would continue, thereby, snowballing an economic slowdown into a serious recession or worse. The FED knew it would get a knee jerk reaction from the markets when it reduced rates in such dramatic fashion. The problem for them at this point is they can't use this tool too often. It will be evident what's happening and each subsequent cut will have less of an impact, as in Japan 1990. The "efficient market" model may exist in academia, but I haven't known too many academics who ever made any money in the stock market.