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To: TimF who wrote (52077)	8/22/2001 7:44:53 PM
From: fyodor_	Respond to of 275872

Tim: Question - Is talking about factors that effect the economy and thus the market and thus indirectly AMD off topic? No, certainly not. A good example of an Off Topic subject is the exchange about IQs, SAT scores etc. that we had on the thread a couple of weeks ago. (which, I'm sorry to say, I had a hand in instigating). -fyo

To: TimF who wrote (52077)	8/22/2001 7:53:16 PM
From: AK2004	Read Replies (1) \| Respond to of 275872

Tim <corrected> one of my friends favorite buzz phrase is that economy(finance, market) is a social science. What he meant by that is that it is all about perception rather than anything else. One can say that it does not really matter what rates are or even that increasing rates better for the country with high debt yet each time the rates go down it has a positive effect. While rates themself do not do much since they are tied to inflation and a lot of other factors the positive "short term" effect is actually causing the economy to produce and hence increasing the overall value on permanent basis Regards -Albert

To: TimF who wrote (52077)	8/23/2001 9:19:00 AM
From: niceguy767	Respond to of 275872

twfowler: "Isn't it low rates more then reductions in rates that help recoveries? " Historically, there has been a high correlation between declining rates and improving economy with a lag factor of about 6 months from the beginning of the rate reduction phase (i.e. January 2000)before signs of economic stimulation kick in. One could argue that the 6 month economy lag factor is renewed with each rate cut and so is now somewhere in February 2002, 6 months from the first January cut, as opposed to July 2001. Let us hope so anyway. It remains, however unnerving, that no sign of economic recovery has yet surfaced given the steep and swift 50%(almost) decline in fed rate over the past 8 months. "Isn't it low rates more then reductions in rates that help recoveries? " I'd guess that it is the percentage change in debt carrying costs that is the key factor...For example, if interest carrying costs were to decline by almost 50% over 8 months as rates drop from 6.5% to 3.5%, one might anticipate a larger positive economic impact than if rates dropped by 25%, from 12% to 9% over the same or longer period as debt carrying costs in the first scenario would be reduced by 50% compared to 25% in the second scenario...If one's interest costs at the outset of the decline period is $1 million, then in the first scenario, one's debt expense is reduced by $500,000 as compared to $250,000 in the second scenario...