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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Ross who wrote (20981)	10/20/1998 4:37:00 PM
From: IQBAL LATIF	Read Replies (2) \| Respond to of 50167

I will be happy to see a perfectly normal looking yield curve with a 200 basis point differential from short end to the long end-- that would reflect the market which is robust and a normal strong growth economy-- this is exactly what I have been saying all along- lower rates not as result of deflationary threats but as a result real rates being too high-- it is a non-inflationary growth environment the realtionship of Phillip curve is broken IT induced efficiencies- the inflation is overstated and the real rates are too high-- the Fed in pre-emptive strike is trying to save the global emerging economies from spiral of deflation by freeing liquidity, the hedge funds levelrage one should appreciate induced a lot of liquidity in the market in absence of the levelrage Fed would like to step up as a surrogate provider of liquidity-- the demand in ASEA ans Latin America needs to be ignited and lower $ rates will help these highly endebted nations which suffered acutley as a result of masive specualtion, so would the banks in US- they can soon boorow at the short end and lend at the longer end- this is Fed old technique to recapitalise banks, soon after first LatAM crisis Fed did the same and now fed decision to cut has weakened $ a plus for ASEA and helped these cash strapped economies to stand on their own feet..Fed has also been able to kill the specualtive binges to break the fine balance of global exchange rates-- the Chinese Yuan and Brazil were the next targets in face of Yen growing strength..