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To: patron_anejo_por_favor who wrote (97036)	4/20/2001 9:07:49 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 436258

The summary of this piece on reliquification is succinct and right on the money: prudentbear.com Today's 50 basis point cut is not going to help the economic situation the U.S. is experiencing. Correct me if I'm wrong, but the main purpose of lower interest rates is to spur borrowing by consumers and companies. The increased borrowing increases demand for goods and investments, which speeds up the economy. The problem now, is consumer credit is at historic levels and there is excess capacity throughout the manufacturing sector. This makes it highly unlikely that lower interest rates will do much to stimulate the economy. Anyone that it might benefit is in such dire financial position, I doubt they would be about to raise any funds, Lucent, Xerox, and CLECs come to mind. We are at the point where we need a recession. There has been such a misallocation of resources by both the corporations and consumers. Corporations have done everything in their power to try and keep earnings growth up in the short-term without much thought on longer-term strategy. Decisions have been made to build another chip plant so they can get as much business now, and were not concerned what could happen if demand falls off. Companies have also spent the late 90's issuing debt to buy back its own inflated stock. Not only are these financial engineering tricks not going to be feasible going forward, but will cause havoc as analysts start to remember companies file balance sheets along with the income statements.