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Pastimes : I AM A MINDLESS ZOMBIE -- Ignore unavailable to you. Want to Upgrade?

To: Rascal who wrote (45)	8/15/2002 7:49:07 PM
From: Maurice Winn	Respond to of 258

Good questions Rascal. The margin requirements were raised for the dot.commers and for concentrated positions. Companies took it on themselves to manage their credit exposure in a free market of borrowers and lenders and share buyers. I don't see why central planners should hand down by edict that a financial institution shouldn't lend me money to buy something, whether it's a car or a company. Neither is that necessary to run the currency properly and maintain its value against competing stores of value and means of exchange. It's best to leave it to buyers and sellers to decide what risks they'll carry and what ratios of debt to equity they'll accept. By interfering in the process of credit management at the individual level, the fed would disrupt market processes. It is vital to avoid governments getting their dirty paws on excess taxes which they just waste, so tax cuts are a good thing. They can always be reintroduced if absolutely essential to fund basic government functions. Running a deficit works okay. By having tax cuts, that left more money in people's pockets to continue their spending patterns which kept demand going. It the tax cuts hadn't happened, government would have had a bigger piece of the pie and they already have too much. Mqurice

To: Rascal who wrote (45)	8/15/2002 8:02:41 PM
From: AC Flyer	Respond to of 258

>>Why didn't Greenspan raise margin requirements when he was worried about exuberance?<< Uncle Al stated on the record that raising margin requirements would have no impact on the mindless zombies because there are (were?) so many other ways that zombies could borrow to buy stock. Think about it, if you are a mindless zombie and you are convinced you are a financial genius because you have a hole in your head where the thinking part should be and you just know that AMZN is going to $400, what do you do when your brokerage tells you that Uncle Al has just raised your margin requirement? Here's what you do: (1) you curse Uncle Al for being an anachronism that just doesn't get the new economy; (2) you call your credit card company for a credit increase, or (3) you get a home equity credit line. Why? Because you can't lose. >>And how can he have supported the GW tax cuts by saying he was afraid the surplus was going to get too BIG?<< Because, like anyone with a brain who has been around a few decades, he knows that if you give a big bag of other people's cash to politicians, any politicians, they are going to spend it. They are not going to say, "hey, here's some extra cash, let's give it back to the people we stole it from." (they should say, "from whom we stole it," but what do you expect, they're politicians, lawyers too, most of them). Hence, pre-empt the whole situation a priori by making sure the pols never get their grubby mitts on it. Get it?