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To: SouthFloridaGuy who wrote (80715)	3/14/2001 11:06:31 PM
From: yard_man	Respond to of 436258

>>Stock Market Falls ------> Household balance sheets fall ------> Consumption drops -------> Recession, Unemployment, etc. << That's almost right ... Stock Market Falls ---> Household balance sheets fall ---> ("let's get a new one of those. What the hell -- we aren't going to have much of a retirement the way things are going. Yeah, and one of those, too") -----> Recession, unemployment ----> consumption falls ---> ("Yeah, it ain't coming back. Sell the rest of it.") Stock market keeps falling ...

To: SouthFloridaGuy who wrote (80715)	3/14/2001 11:25:58 PM
From: Archie Meeties	Respond to of 436258

Cutting interest rates has not thus far devalued dollar denominated assets because the flux of international assets has cont. to be + toward the USD. This flow chiefly involves keeping up the perception that it is the perceived "almost as good as gold" reserve asset, come locusts or rivers of blood. You'll notice that cuts usually come after or during US (and thus global) market downturns. They couldn't be pre-emptive b/c this would couple US equity devaluation with a hightened risk for - USD flux, which would rapidly spiral into a true exodus. As long as the perception remains, the collapse of global equities serves to perpetuate the dollars ungodly lifetime by shunting foreign liquidity into these supposedly safe harbors. Along these lines, only recovering global markets may result in a lower buck.

To: SouthFloridaGuy who wrote (80715)	3/15/2001 3:25:17 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 436258

note that there's a reason why this is a no-win situation: the bubble has created imbalances so great, that the normal cyclical 'cure' that has worked so well in pre-bubble post WW2 history isn't applicable anymore. the only way for this to end well is to allow the imbalances to be rectified as quickly as possible, regardless of the near term pain. however, per experience, this is not the way the authorities will choose. both the Fed and the administration can be absolutely counted upon to unnecessarily lengthen the downturn with all their might...