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To: jim kelley who wrote (73258)	10/20/1998 8:45:00 PM
From: Lee	Read Replies (1) \| Respond to of 176387

Hi Jim,..Re:Basically, Greenspan is taking the position that he wants the US to continue to be one of the engines of recovery in the world economy. You are correct. You might enjoy some of Jim Griffin's views on the rate cuts. archive.thestreet.com From thestreet.com's article by Jim Griffin entitled Fed Head Games The issue turns on whether the economy really is sick, or whether the markets only think it is. Does the explosive widening in credit spreads, and other indications of a spastic reallocation of liquidity, reflect a fundamentally deteriorating outlook? Or are these the short-term, self-reversing phenomena associated with distressed unwinding of highly leveraged trading accounts? I have been of the latter opinion. The beating heart of the global economy -- i.e., the U.S. household sector -- appears to me to be in sufficiently good shape to carry the weight of a fair share of the rest of the world without collapsing. Bend its back, bow its legs and slow it down, sure. Collapse it into recession, no. The relatively mild easing of 25 basis points offered to the markets following the FOMC's Sept. 29 meeting tended to reinforce this perception. If Fed officials felt there were real problems ahead, they might have done something more than an economically meaningless quarter-point stimulus, injected into the already fully responding credit-sensitive sectors of U.S. domestic demand. Until two months ago, the Fed had a tightening bias in place. In early September, Chairman Greenspan hinted broadly at the possibility of an ease -- virtually promised it would be forthcoming. But, at the same time, he was describing the U.S. economy as "impressive" and claiming not to be able to see any meaningful signs of current weakness. Was it unfair to read the good doctor as saying, "You don't really need this medicine, but just to be on the safe side ..."? But, in the last three weeks, the Fed has made two adjustments to its policy stance, including last week's sucker punch to the shorts. This was the first intermeeting target rate adjustment in nearly five years, ever since a more transparent set of plain-English operating rules was put into effect. They seem to be a bit of a hurry all of a sudden. What are they seeing now that they didn't notice mere weeks ago? Regards, Lee