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To: Enigma who wrote (20968)	10/7/1998 11:13:00 AM
From: Dwight Taylor	Read Replies (2) \| Respond to of 116867

I believe Congress did approve this latest round of IMF funding. I believe they will continue to do so. Look, IMF funding has produced at least six years of relative stability in Russia. Funding of the cold war was certainly more expensive. I don't believe we will see a worldwide collapse. What we are seeing is how Japan's huge credit expansion policies and intense industrial production has turned against them, hence our albatross. This depression in Japan was predicted years ago.

To: Enigma who wrote (20968)	10/7/1998 11:23:00 AM
From: Alex	Read Replies (1) \| Respond to of 116867

Greenspan Signals Fed Open To More Rate Cuts By Knut Engelmann WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan Wednesday raised the prospect of further cuts in interest rates to keep the U.S. economy on track in the face of a looming credit crunch triggered by mounting turmoil abroad. Speaking to an economists' group, Greenspan warned that the Fed was grappling with "unknown forces" and a major shift in investor sentiment away from risk and towards safety that was set to dampen economic growth substantially next year. "We are clearly facing a set of forces that should be dampening demand going forward to an unknown extent," Greenspan told the National Association of Business Economics. "This is a time for monetary policy to be especially alert." His comments came a week after the Fed cut a key short-term interest rate by a quarter percentage point to 5.25 percent to cushion the impact of the international economic crisis on the world's top economy. Financial markets had widely deemed that cut insufficient to shield the United States from the storm that has battered much of the rest of the world. "I think it opens up the possibility for much lower interest rates," said John Silvia, chief economist at Scudder Kemper Investments Inc. in Chicago. "What he's telling us is that we don't know what it is going to take to keep the economy moving ahead." Greenspan's comments helped to boost the prices of inflation-sensitive bonds in early trading. U.S. stocks also opened on a stronger note. The central bank head said a "marked shift in investor psychology away from risk and toward liquidity and safety has exacerbated the problems in foreign markets, where deflationary forces remain virulent, and has spread to the financial markets in the United States." While he noted that the U.S. economy was not yet facing a credit crunch, he warned that companies were finding it more and more difficult to raise fresh capital as lenders were becoming increasingly unwilling to take on any kind of risk. "This risk aversion is showing up as increases in equity premiums and the cost of capital for capital investment," Greenspan said. "What we have seen is a fairly dramatic increase in the cost of equity capital." Describing the situation in the U.S. economy as "fluid," he added: "We do not know how far it will go, or how much it will affect consumer and business spending here at home." For now, though, Greenspan said the U.S. economy was still strong and labor markets still unusually tight. "The truth of the matter is we've got an economy which as of now...is really still quite an impressive sight," he said, even though he acknowledged that the manufacturing sector had been hit hard by falling exports and rising imports. "It is pretty obvious that the outlook for 1999 for the U.S. economy has deteriorated measurably in the aftermath of the Russian devaluation and debt moratorium," Greenspan warned. Diane Swonk, economist at First Chicago NBD, said she had been struck by the seriousness with which Greenspan had delivered his remarks. "He's certainly opened the door to another rate cut," she said, adding that the Fed would need to monitor events as they evolve and react to them as warranted. nt.excite.com