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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (8930)	2/28/2004 7:31:53 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

I spent about three hours going over the next Fed chairman's Martin Feldman's work and speeches. If I had to characterize, it would be a straight shooting conservative central banker. He is very big on the social security issue, wrote an important book on privatization. Big believer in low taxes, and made one speech sort of blessing the deficits as a "stimulus". That's probably why the Bushies like him, he'll be on board. In fact he has closely advised both Bushs. There are several speeches, Monetary Policy in an Uncertain Environment and a speech on Deflation in Nov. 2002. In the 2002 deflation talk he says flat out that he didn't see a deflation risk. Remember, this is at a time when Bernanke was making his helicoptor speeches. He often refers to asset prices, using the term "unwarranted rises in prices in real estate and financial assets" and "bubbles". He's not a big bubble fan. I get the impression he is somewhat directly critical of the current Fed chairman on that front. He specifically addressed a Fed staff study that was critical of Japan for not being looser in the 1990's. He said, "At the time Japan appeared to be experiencing accelerating real GDP and positive inflation. How would one know whether an expansionary monetary policy in such a context would prevent deflation or would lead to unwanted inflation and a return of the Japanese asset bubble?" He didn't seem to seriously sweat deflation, unless to was steep and unanticipated. He fears even moderate inflation, saying it can quickly turn to serious inflation. He's big on structural (especially taxes, it's Reaganomics) and fiscal policy to deal with economic issues. I think he would be a moderate on monetary policy and dovish on fiscal policy. I don't think he would use the Federal Reserve in the activist role Greenspan did. He refused to criticize the Europeans in one speech for inflation targeting, say it was appropriate for their situation. He said at times it might be appropriate for the US as well. Finally, in several speeches he suggests he is NOT sanguine about depending on foregn capital (and by extension foegn CBs). Conclusion: maybe not a guy with a big fire hose, but certainly not easy Al either. The financial world is going to change.