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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Rob S. who wrote (72536)	3/17/2001 11:40:04 PM
From: George Martin	Read Replies (2) \| Respond to of 99985

<< Why does everybody like to bash Mr. G.?>> Assuming this is a serious question, the problems with Greenspan go back 2+ years. An important contributory factor for sudden economic slowdown last fall was 1) the prior 175 bps increases, the last of which was 50 bps last May -- even after the 40 % market correction of Nasdaq had taken place. I don't think it was a coincidence that cap ex, order/inventory imbalance got hammered 6 months later. That 50 I believe was the nail in coffin. 2) Greenspan was supposedly fighting a totally imaginable phantom -- inflation. Personally, I believe he had 'asset inflation' more in his sights and couldn't trust the market to do its own correcting. Or, as an alternative, why not alter margin requirements -- that would have been a better way to check some of the speculative excess that clearly was present. 3) In addition, I believe he totally blew it regarding the sustained drain of continued high energy costs, which I saw described as basically a world-wide tax of some 600 to 700 billion dollars last year. 4) Then when evidence was mounting last fall of signif. slowdown -- just because the FOMC had never done it before -- he refused to go from RATE INCREASE bias to an actual cut. The NAZ tanked 300 points. 5) He had the opportunity for an intermeeting cut in Feb. which I think would have helped with a more orderly transition. Unfortunately, this kind of bloodbath since the end of Jan. -- now spread to S & P and then to the Dow -- may really take a long time to repair and have very far reaching repercussions not only on the wealth effect, consumer confidence, consumer spending (2/3 of GDP), further impact on business,etc. mushrooming and escalating. Cap. gains revenues will also take enormous hit. Greenspan and FOMC motto: ' Wait too long, then do too much.' He missed the boat in 90-91, too. Did the same thing. He should have let the market do its repair of "asset inflation" and not precipitate a recession to do so. And we see now this has the potential to spread world wide. What a shame. Unless he does something unexpected and remarkable -- and I don't think he will as he seems to refuse to consider at any time that FOMC policy is in error -- I really believe the general good standing he enjoyed will be permanently tarnished. My vote is to get rid of him. Unfortunately, at this point, I think even that's too late for the carnage already caused.

To: Rob S. who wrote (72536)	3/18/2001 12:26:54 AM
From: George Martin	Read Replies (1) \| Respond to of 99985

Another response to this topic from a different thread -- the link to the Nasdaq Chart with Fed Moves is very dramatic. To:Cush who started this subject From: Cush Saturday, Mar 17, 2001 12:35 PM View Replies (2) \| Respond to of 1258 <font color=green>The Nasdaq Three Year Chart with Fed Moves www3.sympatico.ca I believe the US Fed is being controlled by an old man who has received un-due credit for the recent years of prosperity and not enough criticism for the damage he has done to the world economy. In thirty years, I think they'll be calling the recession we're entering into the Greenspan Winter. Medical and scientific advances that might have been, had we continued on the growth path we were on, won't be happening in the coming years. The strength and enthusiasm of the growth sectors of our economy have been sapped. In this chart, I've marked the Fed rate moves over the past three years. It's probably worth noting that prior to 1998 (which is shown on the chart), the previous move was a rate increase on March 29th, 1997. There have been very few Fed rate moves in the last decade. The Fed became exceptionally active these past three years, near the end of an extended period of prosperity in the North American economy. The chart shows where the Nasdaq was six months after the rate moves. I think it's generally accepted that Fed rate moves take about six months to have an effect. IMO, the chart shows clearly that the 3rd, 4th, 5th, and 6th Fed Rate Increases were implemented in such a way that they were beating a dead horse, starting about this time last year. In particular, the last two rate increases were implemented despite early evidence of the effect that the first two rate increases were having. IMO, it's time this smirking old man with his sufficiently ambiguous mumblings was brought under control. The emperor has no clothes. Pass the word. Cush

To: Rob S. who wrote (72536)	3/18/2001 9:30:04 AM
From: Ted Downs	Read Replies (2) \| Respond to of 99985

Rob, I was going to reply to your "Why does everyone bash Mr. G. " remark. I think you got enough responses on that so far. In going back to 1990-1991 Greenspan screwed up there significantly, but was bailed out by a new age in productivity and the Clinton "prosperity years" which in fact Clinton had not a damn thing to do with. Both Greenspan and Clinton were the beneficiaries of a wonderful time. Until Greenspan started targeting the markets with higher interest rates things were rolling along fine. The way to rein in a speculative market would have been to raise margin requirements not to destroy business enterprise. Greenspan screwed up big time and now he is between a rock and hard place. He can't lower aggressively without causing financial collapse in Japan. That may occur anyway but all of this has come about because of Greenspan's concern and obsession with speculative markets. Japan was in a fragile state before this debacle now their financial state could take us all down. The banks are now Greenspan's primary responsibilty and he could care less about the stock market. Yes Greenspan has backed himself into a corner and I doubt he will get out of this one unscathed. Criticism is well deserved and he hopefully is aware of that fact.