L. Summers writes: >Over the past 20 years major financial disruptions have taken place roughly every three years, starting with the 1987 stock market crash; the Savings & Loans collapse and credit crunch of the early 1990s; the 1994 Mexican crisis; the Asian financial crises of 1997 with the Russian and Long-Term Capital Management events of 1998; the bursting of the technology bubble in 2000; the potential disruptions of the payments system after the events of September 11 2001 and the deflationary scare in the credit markets in 2002 after the collapse of Enron.<
and now the housing/credit crunch. but where's the next financial "disruption" going to hit? suppose that the Fed reduces rates and eases credit further either to prevent the spread of the financial mess to the rest of the economy or to moderate the recession that hits when the financial mess does spread. Suppose the Fed succeeds, so that all the US sees is a mild recession of the sort seen in 2001 (though, like that one, it's likely to be less "mild" for those competing in labor markets). So a "soft landing" is achieved (even though that phrase should make our backbones go into frigid overdrive). but in previous financial crunches, the Fed's response simply caused a delayed reaction in other sectors. The Fed's response to the "Asian financial crises of 1997 with the Russian and Long-Term Capital Management events of 1998" helped to cause the "the technology bubble" which burst in 2000. The 2001 "save" sparked the housing bubble. Etc. so what sector is most likely to be hit if the Fed succeeds now? -- Jim Devine / "In the years since the phrase became a cliché, I have received any number of compliments for my supposed ability to 'think outside the box.' Actually, it has been a struggle for me to perceive just what these 'boxes' were — why they were there, why other people regarded them as important, where their borderlines might be, how to live safely within and without them." -- Tim Page (THE NEW YORKER, August 20, 2007).
