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To: patron_anejo_por_favor who wrote (216449)	1/24/2003 1:09:00 PM
From: yard_man	Read Replies (1) \| Respond to of 436258

early yet ... but I think it has a chance <ng>

To: patron_anejo_por_favor who wrote (216449)	1/24/2003 2:06:29 PM
From: mishedlo	Read Replies (2) \| Respond to of 436258

Kendall Harmon thestreet.com 1997 Revisited 1/24/03 12:53 PM ET "Why didn't they listen to Cathy Minehan? I know it's a sobering day for a sobering subject, but I believe it behooves every RM reader to take a look through the 1997 minutes of the Federal Reserve just released yesterday. In particular, the minutes of May 1997 deserve careful perusal. Alfred Broaddus called it “a tough meeting” because the Fed came within a hair's breadth of raisng rates ¼ point until Chairman Greenspan won the day with his productivity arguments. Here are three crucial quotes (the emphasis is mine). From Cathy Minehan: “What if we were to tighten now by 25 basis points and we were wrong and everything started to come in at least as well as the Greenbook sees it, and maybe even a little slower? Are the costs of being wrong in that way unacceptably high? I do not think so, and one of the reasons has to do with the argument of the psychological impact on the markets. I meet with a group of investment managers on a fairly regular basis. Their discussions in recent weeks have continually focused on the availability of credit, the liquidity of the markets, and the excesses that they see everywhere, particularly when it comes to commercial real estate financing. Rather than feeding a sense of caution through uncertainty about our actions, I think that not moving at this meeting or certainly not moving soon will lead to a greater level of certainty among market participants that they can persist in their excessive activities and that will feed into more speculation in the asset markets than is healthy. From Alfred Broaddus:” With respect to productivity, I am glad that you have highlighted it today, Mr. Chairman. I think you are providing a very useful service not only to the Committee but to the country in emphasizing that we may well be in the midst of a significant increase in trend productivity growth…As always, policy is a matter of balancing the risks. Let me tell you that I recognize the risk in moving today. But I think there is also a substantial risk, in my view a greater risk, if we do not move now. From Jerry Jordan: “For me, the policy issue is not a question of a little now or a little later. It may turn out to be a question of a little now or a whole lot later….I agree that there are a lot of similarities to the 1920s. I just do not want it to end the same way. [Laughter] It's not funny anymore. Is there anyone who wouldn't want the decision to be redone now in historical retrospect ? And what must the Fed be thinking now?"