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To: Glenn D. Rudolph who wrote (22936)	10/25/1998 8:22:00 PM
From: JBL	Respond to of 164684

Glen : The comments by Grant about the Fed's management of growth resulting in changing people's behavior towards money are spot on. Anytime people come to rely on governments or institutions to manage risk for them, behavior towards risk becomes lax, and then irrational. (Institutions invested in Russia in spite of all its obvious problems because they thought it would never be allowed to go bust.) I believe people will come to realize that lower interests rates in the US cannot by themselves turn the tide of overcapacity / deflation in a world economy that has become so highly integrated. IMO, 2 factors will determine the rate of decline in the market : 1. How fast the US investors realize that the tie up between lower rates and higher stock prices is no longer valid and 2.the situation in Japan. In both cases, I think (and hope) that the adjustments will be progressive, and that we will avoid a crash type scenario. Indeed there are still many positive factors in the US economy, and Japan has shown a determination to do almost anything to avoid a hard landing of its economy.