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To: John F. Dowd who wrote (36040)	11/9/1998 2:11:00 PM
From: Windseye	Read Replies (1) \| Respond to of 97611

Pardon me, I'll just plunk this in here randomly... I wrote this to Squak box now: Mark, Brain, and Kahuna, Monday's (11/9) discussions with Kathleen regarding Greenspans comment regarding the spread and the guest hosts observations seem to confuse the realtionships among spreads, liquidity, and interest rates; at least in my mind there are some gaps. I can understand spreads increasing because of increased fears regarding repayment of risky loans (within US and internationally), but isn't it reasonable that interest rates are hiked to make offerings more attractive, and hence the spreads are only in effect at the prevailing interest rates? And who would believe that spreads would not be affected by estimates of risks and rewards? Does liquidity increase when bond sellers are willing to raise rates? Does it increase when the Fed is seen as willing to lower the rates they can set and simultaneously tell the credit markets that they will supply money? If the 1998 bubble was deflated by the summer and fall bad news (Russia, Brazil threat, and LTCM hedge fund debacle) doesn't it seem perfectly reasonable that the Fed views business as normal ONLY when the financial marketiers are more cautious about wild, speculative hedging? So the spread where it's at and possibly "trending lower", with folks being more cautious about risky adventures sounds like a favorable mix not only to the Fed but to stock market investors as well-- more optimum conditions prevailing? Doug