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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (15405)	11/6/2003 11:21:34 AM
From: LindyBill	Read Replies (1) \| Respond to of 793671

But what if the problem is, we have maneuvered ourselves into an unwinnable situation? What if all the options on the table are bad ones? The above is a "What if" I don't agree with. Major false premise, IMO. Can't disprove your premise if you want to hold it. TWT. As for Robert Scheer's column, I have had a visceral hatred for that Commie for years. The column shows that he has totally climbed in bed with the enemy. Not many people out there who get me that mad, but he does.

To: Sam who wrote (15405)	11/6/2003 2:55:41 PM
From: LindyBill	Respond to of 793671

Novak points up some major decisions at the Fed. ________________________________________________ Fed chief nixes targets on his watch November 6, 2003 BY ROBERT NOVAK SUN-TIMES COLUMNIST suntimes.com Behind the Federal Reserve's decision last week to make no change in monetary policy were two momentous developments inside this most secretive government institution. First, Chairman Alan Greenspan, nearing the end of his protracted tenure, reasserted control after recent shaky performances. Second, an ideological struggle began inside the central bank that could influence the U.S. economy far into the future. Greenspan's strength was seen in the Federal Open Market Committee's decision Oct. 27 to not only retain low short-term rates but keep them for a ''considerable period'' -- despite the desire of the Fed's influential staff to eliminate those two words. That also represented movement toward an ''inflation standard'' in determining monetary policy, diminishing power of future Fed chairmen and bureaucrats. Greenspan wants to avoid the impression of controversy in his final years and hoped to cloak an important doctrinal debate between two remarkable new Fed governors. These two governors both took office Aug. 5, 2002, ending years of humdrum appointments to the central bank that reflected Greenspan's wishes. One was Ben Bernanke, the 48-year-old chairman of Princeton University's economics department and the most distinguished economic theorist on the Federal Reserve Board in recent memory. Bernanke was a rare Fed nomination originated in the White House, not by Greenspan. The other new governor was 59-year-old Donald Kohn, a Fed staffer for 35 years and Greenspan's right-hand man. Bernanke has long advocated setting inflation targets to determine whether the central bank should tighten or loosen. Not wishing to offend Greenspan, the rookie governor has argued that this will help the next chairman, who would lack the magical finesse of ''the maestro.'' An inflation standard would threaten the central bank's aura of mystery and its world-famous staff's actual power. Kohn, who did not become only the third member of the Fed's bureaucracy ever to be a governor just to preside over its diminution, opposes targeting inflation. Bernanke vs. Kohn is no mere theoretical debate. Greenspan, blamed by Republicans for contributing to the first George Bush's 1992 defeat by tightening money, does not want to doom re-election chances of the second President Bush by snuffing out the recovery -- particularly after the president extended his tenure to 2006. Kohn and the Fed staff want to tighten whenever the economy grows even if inflation continues to fall, as is now happening. A showdown was set for the FOMC meeting of Oct. 27. On Oct. 23, Washington Post reporter John M. Berry wrote that Fed policymakers were not only going to retain the low 1 percent overnight rate but ''are also likely'' to repeat their September statement that rates would stay low for a ''considerable period.'' What Berry writes is seen in financial circles as Greenspan gospel. However, an article in the Oct. 27 Wall Street Journal by Greg Ip revealed strong opposition inside the FOMC to those two little words. That was seen as the voice of Kohn and the Fed bureaucracy. Money markets were in doubt. In July, Berry had signaled the FOMC would reduce the overnight rate by 50 basis points, down to 0.75 percent. But Ip reported the cut would be only 25 basis points -- reflecting the powerful Fed staff's caution. At the July meeting, Greenspan was passive and the staff prevailed. The results were temporarily devastating, with long-term interest rates rising and stock prices falling. To prevent calamitous long-term effects, Greenspan did not let history repeat itself in October. The ''considerable period'' statement, implicitly targeting inflation instead of growth, was retained. One veteran Fed-watcher called it ''a manhood issue'' for the chairman. Greenspan is reported to have no objection to targeting inflation, but only after he leaves the Fed. If this happens, there may never be another Greenspan -- a small price for a more stable economy. suntimes.com