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To: Maxer who wrote (33145)	9/19/1998 1:39:00 PM
From: Elwood P. Dowd	Respond to of 97611

Chuzzlewit (66215 ) From: stock bull Saturday, Sep 19 1998 1:05PM ET Reply # of 66218 Chuzzlewit & ALL: Something to think about...interesting article... "Next market crisis may twist Fed chief's arm By Pierre Belec NEW YORK (Reuters) - The next stock market crisis may be the thing that will twist Federal Reserve Board Chairman Alan Greenspan's arm into delivering a cut in interest rates. For the sake of the market, it better come soon. Until the chairman makes his intentions clear, the markets have nothing but uncertainty about the turmoil affecting 30 percent of the world's economies to trade on. Greenspan was back in the news Sept. 4, giving Wall Street what it wanted to hear -- there is a chance the central bank could lower interest rates for the first time since January 1996. Markets from New York to Moscow soared on the prospect that the world's most powerful central bank might help rescue Asia and other emerging markets from their economic mess. But what Greenspan giveth, Greenspan taketh away. Within a week of his speech in Berkeley, Calif., he dashed hopes by telling Congress that there were no coordinated efforts among the world's central banks to lower rates. Stocks tanked. Analysts said the Fed chief's famous obscurity has raised the risk of trading stocks to a new level. ''In the absence of any action, or further enlightening comments by the central bank, I would not be surprised to see the market drop 20 percent from its recent high,'' says Allen Sinai, chief global economist, Primark Decision Economics. ''The Fed has sent the message that it understands there are big risks for the economy from the overseas crisis,'' said Sinai. ''But talk will not be enough for the market, and action will speak louder than words.'' The markets could become even more dangerous because many economic gauges are pointing to big economic problems in the next 18 months, analysts said. The reason: There will be more economic explosions in Russia, and fresh troubles in Asia and other emerging markets. Hugh Johnson, chief investment officer at First Albany Corp. said the Fed is concerned the woes overseas will be transmitted to this country and lead to a slowdown. ''Many big companies like General Motors, 3M, Applied Materials are saying their sales are being affected by the weakness in Asia and that they are going to lay people off,'' he said. ''When the companies start to reduce their payrolls, this leads to a decline in consumer confidence and spending by Americans and eventually to weak activity,'' Johnson said. He said that one of the few things that the United States can do to protect itself against a global contagion is to lower interest rates to keep the economy from stalling. ''It's very much a case of self-interest,'' Johnson said. The central bank's policy-setting Federal Open Market Committee next meets on Sept. 29 to weigh interest rates. ''The task of the policy makers will be to look ahead and ' ask, 'What will the risk be for the U.S. economy in the next six to 12 months in light of everything that is going on, including the global market turmoil,''' Sinai said. ''Looking at the situation that way, it would make sense for the Fed to reduce interest rates later this month.'' Some experts think the Fed may not move on interest rates before the end of the year, fearing it could stoke the inflation fires in the American economy, which is still the brightest in the world. ''The world economy and financial markets are a new ballgame and the United States is more vulnerable to outside problems than most people think,'' Sinai said. Johnson said it is premature to expect one or a series of rate cuts to be a quick fix for the ills of emerging markets. ''The International Monetary Fund, which is the lender of last resort for these countries, doesn't have any money after throwing away billions at Russia,'' he said. Johnson said the IMF will have to change the way it does business because its ''Rambo-esque'' rescue plans have often created full-blown credit crunches in countries that have gotten help. The IMF, the global community's ambulance squad that was created after World War II to rescue sick countries, has had little luck in helping Indonesia, Russia and South Korea. The Asian crisis could last for another year because the tough economic measures that were attached to the IMF's rescue loans are strangling Pacific Rim countries. The contagion is spreading to Latin America and estimates are that $150 billion will be needed to bail out that region alone. ''The crisis is way too big for the IMF to handle, given its limited resources, and the $18 billion that the U.S. Congress might optimistically come up with is just far short of what the IMF will need to restore confidence in places like Brazil,'' Johnson said. For the week, the Dow Jones industrial average rose 100.16 to 7,895.66. The Nasdaq composite index gained 22.13 to 1,663.77 and the Standard & Poor's 500 index rose 11.03 to 1,020.09." 16:59 09-18-98 Comments appreciated. Stock Bull ------ Previous \| Previous \| ------ \| Respond \| Quotes - 100-Day Chart - News - Profile - Earnings - Discussion - Computers View SubjectMarks Bookmark this Subject Dell (NASDAQ: DELL) Date: Sep 18 Last Trade 57 7/8 Change - 1/4 (-0.43%) Bid 57 7/8 Ask 57 15/16