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To: bananawind who wrote (13172)	7/31/1998 11:05:00 AM
From: mmeggs	Respond to of 152472

I may be a little late to the party here, but I'm heading for the bar anyway. I think one of the most interesting points to remember is the relative inflexibility the Fed has in dealing with inflation, M1 and all, at this point in time. Assuming Greenspan and the Fed think the market is "irrationally" overvalued, it would be very difficult to decrease rates, and or take other measures to increase liquidity - buying bonds, decreasing reserve requirements, etc. Anyone care to guess what Pfizer's PE would be is rates went down??? Unfortunately, this is what Japan needs, in part, to stabilize the yen - more dollars out there. On the other hand, if inflation does seem to perk up, and I agree that the numbers are understated due to the immeasurable "wealth effect", raising rates will accelerate declines in SE Asian currencies, exacerbating solvency problems there. What to do, what to do... BTW, I may have read it on this thread, but it is astounding: The total amount of bad debt, measured by American accounting standards, held by Japaneses banks is nearly $1 trillion. (About double what they are currently claiming) That is a staggering deficit. Proabably just preaching to the choir... mmeggs