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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: tradermike_1999 who wrote (7641)	8/23/2001 3:37:52 PM
From: LLCF	Respond to of 74559

Agreed... and in todays world there is no rate too low... the brain automatically looks to experiences for guidance when under pressure: Japan. IMO if we keep slowing rates will go to zero here as well, I see no one worried about $ value or inflation ramifications nearly as much as a slowdown. When WILL it become an issue?? Not till it happens. DAK

To: tradermike_1999 who wrote (7641)	8/23/2001 4:05:37 PM
From: Maurice Winn	Respond to of 74559

Yes, TM, but the fact that that 19th century person says Kudlow is in panic doesn't make it so. I would give zero value to anything that person wrote because they obviously are just a communist die-hard who doesn't understand how things work. But let's think about it for a minute. I'm not in panic and I've been predicting interest rate cuts for 2 years. This situation was obviously going to happen way back in 1999 and it was only a matter of when it would happen. It has [so far] unfolded just as I thought it would - though I did think it would have happened faster and earlier [but I am constantly surprised by how slowly people react to things]. Oil zoomed from $9 a barrel Xmas 1998 to $30 a barrel [Dubai traded] by mid 1999. That makes quite a dent in the average SUV owners income. Because of lead times it wasn't until Y2K that the SUV owners [and most people] realized that oil price changes like that do have an effect on the world. That change represented a very major economic dislocation. We have been adapting to it for 2 years now, without a major problem we should note [thanks in part to having had even bigger oil prices shocks and that the economy is far less susceptible to oil price rises than in the 1970s because oil as part of the world's economy has shrunk a long way and hugely less in the USA]. The dot.coms were off the planet and so were many tech stocks. They had to come back to earth at some stage and in they have. When they came down, they were obviously going to carry other stocks with them [because when people have a margin debt and they've lost all their value in one company, they have to sell another, which might be perfectly good, to reduce their debt, meet margin calls etc]. That's what happened too. We are seeing the last of that tidying up process now. There is negligible damage left to come from the dot.bombs [they are mostly near zero although some seem overvalued still - but they are small in the grand scheme of things and there is always a bit of madness in markets]. Then there was the serious Y2K fear. It's easy now to be a told you so claimant and I was one of those who thought it was a load of rot - I thought that because companies knew about the bug for years and had been working flat out to ensure they were okay. It's the problems which are a surprise which get people in big trouble. But the potential shambles was huge and it was judicious to stack up a bunch of liquidity to ensure there was no disaster. Then, in Y2K, Uncle Al had to raise rates to stop the madness. People squealed but he was doing the right thing. Once the dawning of economic sanity arrived and people looked for the bottom line and found none, the sell off, layoffs and poverty effect [opposite of wealth effect and the Sudden Wealth Syndrome] set in. Uncle Al had to print like mad and lower interest rates quickly to rebalance the US$ in peoples' minds to avoid deflation. A deflationary collapse into a financial black hole is not considered a heck of a lot of fun by most participants. It's all going according to plan. There is no serious crisis [for most people and the economic activity of the world]. It's just the usual glitch which we get every few years as over-excited expectations are brought back into line with bottom lines. It's not a matter of begging for interest rate cuts. Those are being done, sensibly and in a timely way. Who is panicking? Where is the serious crisis? 5% unemployment is on the low side of normal. Production hasn't dropped significantly [less than 1% or something like that]. We do know what to do to fix the economic dislocations - CB will be more thoughtful about buying an SUV next time. People will get jobs instead of planning first class trips to Paris to drink champagne. People will not give their hard-earned dosh to some glib internet kid with an IPO. Billions of people are taking trillions of actions to keep their lives on the straight and narrow. They know what to do [or if they don't, will lose their money to somebody who does - they will have to work for the people who know what to do; which is defined as those who were lucky or clever - as Jay says, it's always a combination]. Show me the crisis! Mqurice

To: tradermike_1999 who wrote (7641)	8/23/2001 4:46:50 PM
From: t4texas	Read Replies (2) \| Respond to of 74559

he just wants his bubble back gosh, i don't think there is much to kudlow's lamentations for lower fed rates other than what northern trust's kasriel wrote a few weeks ago, i.e., kudlow wants to try to reflate the bubble, and knows/thinks continuously much lower rates are the only way the reflation can appear to happen. i don't think kudlow knows what is going on, but i do think he knows what he is doing. much is made recently about analysts who recommend stocks they own/don't own/short/don't short, etc., but nothing is made of kudlow's constant comment after he finishes making his normal complaints about greenspan's fed not having lowered short term rates low enough yet (below the 90 day tbill rate and leave them there). he almost always follows this with, "i would be buying stocks here." over the months i have been hearing him say this, i have been surprised that he has not once disclosed (or been asked to disclose) what stocks or bonds he owns (or that he does not own stocks). it just seems disingenuous of him to float his opinion as cnbc's economist and at the same time to tout "buy stocks now." my conclusion has been that he personally is holding a lot of tech stocks that are underwater, and he wants to use his bully pulpit to get that bubble going again if possible.