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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Lee who wrote (3222)	11/18/1998 11:45:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

'morning Lee: Geeez this is a pleasant surprise, I had no idea you were aware of this thread. I was trying to find your post to me over at the Dell thread but couldn't find it. Thanks for that link about 'Fed ease and liquidity'. Matter of fact a friend of mine who is in commercial real estate was telling me a few months ago how difficult it was for his clients to borrow money from banks for commercial real estate projects.He told me now the banks want the borrowers to have equal or more in personal assets to get any loans approved,quite a difference from a few years ago. I can understand the banks reluctance as there seems to be glut in commercial real estate at least in our market,not so in the residential segment though. I guess Ratan Lal told us on the Dell thread one time he had trouble getting loans as well in the New York area on his properties or something like that. Anyway don't be a stranger now,come back and see us again willya?

To: Lee who wrote (3222)	11/18/1998 11:47:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

The demise of NAIRU - Hi Lee: Interesting theory well actually not a theory but seems rather obvious and very true considering the last 4 years of statistics. ======================================================== Wednesday November 18, 10:52 pm Eastern Time Low jobless rate not inflationary--McDonough By Isabelle Clary NEW YORK, Nov 18 (Reuters) -- Federal Reserve Bank of New York President William McDonough on Wednesday quelled the economics theory that a low unemployment rate is inflationary and said Fed policy in recent years set out to challenge that notion. McDonough told the New York District of the Securities Industry Association (SIA/NY) that U.S. monetary policy was influenced a few years ago by ''a bit of economic theory that if the unemployment rate fell below 5.0 percent... inflation will get out of control.'' ''The FOMC (Federal Open Market Committee) decided we were prepared to take the risk that theory was not valid,'' McDonough said, referring to the mostly steady U.S. monetary policy from early 1996 to mid-1998 when the Fed raised interest rates just once despite strong growth and declining unemployment. ocates of the NAIRU -- or non-accelerating inflationary rate of unemployment theory -- think inflation will rise with a jobless rate below 5.75 percent and that the Fed should raise interest rates if unemployment falls past level. The U.S. jobless dropped below 5.75 percent four years ago and continued to drift to a recent low of 4.3 percent without igniting any inflation. McDonough credited the Fed's mostly steady policy in recent years for ''the combination of good economic growth and very low inflation'' prevailing into the 7th year of the expansion. The New York Fed president, who also is the FOMC vice chairman, did not comment on the Fed's third interest rate cut in less than two months announced on Tuesday and aimed at appeasing shaky U.S. capital markets. But he jokingly told the audience of equities dealers they might want to thank him ''for the three things that I have something to do with'' -- the Fed's easing moves on Sept. 29, Oct. 15 and Nov. 17 that brought the funds rate to 4.75 percent and the discount rate to 4.50 percent. McDonough, who received the SIA Travers J. Bell Memorial Award, asked those who benefited from the U.S. equities rally to contribute to the SIA ''stock market game'' program that promotes economic education, including among minorities.