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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Jack Clarke who wrote (96663)	7/21/2002 2:06:16 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 99280

Jack, I completely agree with your suggested substitution. The question is should he have raised interest rates during those three events (Asian Malaise, Russia/LTCM debacle and pre Y2K). Personally, while I was fully cognizant at the time that the piper will be paid (and posted on that on SI, mostly on the Asia thread at that time), I felt that keeping the world financial markets from freezing up was more important than being "holier than the pope" on the monetary side. One very interesting contribution to the rapid debacle from March 2000, which is completely absent from the financial press, was the extremely tight fiscal policy conducted by Rubin, he was trying to counteract Greenspan's efforts to keep the market liquid, and rightfully so. However, historically the worst economic contractions have occurred after the government run two or more years of budget surpluses. A budget surplus means that money is taken out of the economy, and that of course, eventually leads to economic contraction. I mentioned this aspect early in 2000, but got no heated argument one way or another.... The tight rope balance should have been to keep an even budget, and if debt was considered too high (which I still don't think it is), reduce it over a long term by having minimal surpluses of under 1% of GDP, not the 1% to 2% we were running. Zeev