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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (53382)	3/25/1999 11:17:00 AM
From: Freedom Fighter	Respond to of 132070

Chris, >>Let me get this straight. Reserves being drawn down by demand for money by corporate america. Corporations are using the money to buy back stock in ever increasing amounts. (Since book value at historic low, they are buying assets with debt and overpaying for it) Federal Reserve "saves the bond market" by expanding the money supply and cutting rates rapidly. Federal Reserve claims disinterest in the stock market. Whats wrong with this picture ? << In my mind you are hitting the nail on the head. Greenspan occasionally pays lip service to market prices, yet when push comes to shove he opens the credit spigots for Wall St. and the rest of corporate America to bail out the market, minimize losses, and give everyone their fair share of time to cash in. He then washes his hands of the situation by claiming that his mandate is only price stability and sustainable economic growth and not making asset value judgements. I occasionally completely lose my composure on this subject. If you share the "bubble" view and think this is a dangerous situation (as I do) you must also think that Greenspan is either an idiot, the most irresponsible Fed chief ever, or bought and paid for. I really can't find a 4th alternative. Whenever the system starts choking, he lets the credit flow again and grows the bubble larger and more dangerous. And as it grows he says "hey guys prices are getting ahead of themselves". Well he should have done something about the situation long ago. Before it was dangerous and global considerations became part of the discussion. Sustainable economic growth is not possible when you are creating the greatest financial asset/credit bubble ever. I think history is not going to be as kind to him as his current reputation suggests. Wayne Crimi

To: valueminded who wrote (53382)	3/25/1999 12:06:00 PM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Chris, see #reply-8515781 for some of Dr. Richebacher's comments and Northern Trust site ntrs.com . In order to maintain its stimulative effect on the economy credit must expand at an ever increasing rate but this is not possible- at some point credit will be tightened by market forces. asset- backed and mortgage- backed securities have played a major role in this credit bubble and at some point the market value of these securities will decline which will dramatically reduce the supply of credit from nonbank sources. Mike