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To: Chuzzlewit who wrote (35895)	3/27/1998 5:19:00 PM
From: Lee	Read Replies (1) \| Respond to of 176387

Hi Paul,..Re;<<Fed policy>> I agree that Alan can't increase the discount rate at this point. Japan is flaky as all get out. $/yen hangs around 130 and lots of currency types are looking for 135 to 140. It's a tenuous position because of Japan. Our trade deficit is already ballooning because of increased imports as well. This serves functionally as a balance on prices (manufactured and electrical goods). The decrease in oil prices has served as a tax cut somewhat but as you point out, but this is somewhat offset by slightly decreasing exports and manufacturing job growth. The bigger affect on our economy might be decreased earnings because of a lack of manufacturer's ability to pass through any pricing increases. So they can talk all they want about wage pressures but as long as it's not ending up on the price line, we can still maintain this unbelievable economy. The Fed is not likely to tune an engine that's already running smoothly on all cylinders. I do expect the demand/supply equation for crude to return to normal but not until sometime next fall as you say. I think that short of some miracle of recovery in Japan, we should remain in the 5.7 to 6.1% range on long term rates which is not bad as it makes our debt attractive to foreign buyers. (Although the UK debt is getting better.)<g> Regards, Lee