I suspect that Greenspan, like Clinton, were very fortunate in presiding at a
time of prosperity and riding old wave of good luck -- sort of like the TV
weather personality grinning because it going to be a beautiful day. Well, who
knows, maybe the weather is going to be a little bit rough.
Jim Devine wrote:
> Tom wrote:
> > This kind of disconnect between Fed signals and market movements is
> > unsustainable. Either a new consensus forecast for interest rates will
> > form or the Fed will begin to lose its sacred "credibility."
>
> In a way, the Fed has already lost its credibility. After applauding John
> McCain's joke about wanting Greenspan as Fed-Head even after his death
> (propping him up like in "Weekend at Bernie's"), the business press seems
> to have turned against him for wanting to kill the golden goose. (Jokes
> such as "How many people at the Fed does it take to screw in a light bulb?
> One. Alan Greenspan holds the light bulb and the whole world revolves
> around him" have appeared.)
>
> You know, the fact that the stock-market speculators are dismissing the
> "cooler heads" at the Fed seems one sign that there's a bubble going on.
> The questions are: how much of the bubble is financed with borrowed money?
> To what extent has the bubble spread beyond equities to real estate,
> housing, art, etc.? How low must the fed funds rate [the interbank rate] go
> to stem the impact of a Crash on the economy at large? Can the fed funds go
> that low? How fragile is the current growth process outside of Wall Street?
> The answers to these questions that will help decide how big the impact of
> the bubble's popping will be.
>
> Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
--
Michael Perelman
Economics Department
California State University
[EMAIL PROTECTED]
Chico, CA 95929
530-898-5321
fax 530-898-5901
