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To: Earlie who wrote (121076)	6/28/2002 9:13:20 AM
From: Art Bechhoefer	Respond to of 152472

Earlie, thanks for your thought provoking comments. The real problem with Greenspan, as I see it, is the way he has narrowly defined his job to be merely adjusting interest rates, rather than using other tools available to the Fed. When Greenspan accused investors of irrational exuberance, he proceeded to raise interest rates to dampen investor enthusiasm, instead of using the more precise tool--increasing margin requirements. The overall interest rate increases helped lead the economy into a recession, whereas the adjusting of margin rates would have hit at the core of the problem without damaging the rest of the economy. When I say that things are different now from the way they were in 1929 and that era, the main difference is the disclosure laws, passed initially in 1934, together with the knowledge of the damage done by artificial trade restrictions. Even though government leaders sometimes fail to practice what they preach, the overall functioning of the financial markets today is better than in 1929, simply because of the effects of intelligent regulation. Furthermore, the system of program trading curbs and other mechanical adjustments to the daily action in the markets guards against panic reactions and loss of confidence. The main thing missing from today's market situation is the failure to prosecute vigorously for fraud on the market, and to demand jail sentences for those who are convicted. There are long term distortions, however, that could weaken the markets over time, including the reappearance of deficit spending, without any attempt to obtain additional revenues to cover the spending. These are political problems that can only be resolved by concerned voters. Art