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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Frank Pembleton who wrote (726)	8/28/2001 7:12:16 AM
From: Frank Pembleton	Respond to of 36161

Rate Cuts Won't Spur an Economy Choked by Debt By GRETCHEN MORGENSON was a law of nature, according to Wall Street. Whenever the Federal Reserve cut rates, the stock market moved higher in six months or so. Such was the chant in January, when Alan Greenspan began his most recent rate-cut crusade. But as the ensuing months in the market have shown, brokerage- firm gurus are better at salesmanship than science. The natural law they cited appears to have been suspended. Including the quarter-point cut last Tuesday, rates have been slashed by three percentage points this year. Yet the economy has weakened and the sure-thing bull market is missing. Notwithstanding the rally on Friday, the Standard & Poor's 500-stock index is down 10 percent for the year, while the Nasdaq has lost 22 percent. Investors appear to be recognizing that many woes faced by corporate America cannot be eliminated with a wave of Mr. Greenspan's wand. The cold truth is, when borrowers are up to their eyebrows in debt, even the most aggressive interest rate cuts can't seduce lenders into making additional, and riskier, loans. nytimes.com