|
PureBytes Links
Trading Reference Links
|
Greenspan may not be responsible for the basic bull market, but I think he's
responsible for the massive advance over the past 5+ years
The cause was only partly due to the lowering of interest rates; mostly due
to the massive increase in the monetary base, which is controlled by the
FOMC.
But the "Greenspan put" regarding the stock market has about run its course.
The consequences for expanding the money supply has been a financial bubble
& massive dislocations in the economy. It will take a long while before
these malinvestments are worked out. The closing of some internet companies
is just the beginning.
And the consequences of Greenspan bailing the market out on several
occasions over the past few years, has created a moral hazard that the
public will continue to pay for.
The bulls on Wall Street should indeed put up a statue for Greenspan. But
unless they do it quickly, my guess is there will be a huge crowd waiting
to tear it down, as I believe the general satisfaction with Greenspan will
falter.
----- Original Message -----
From: "scheier" <scheier@xxxxxxxxx>
To: "Felix" <felixty@xxxxxxxxxxx>
Cc: "Omega Users List" <omega-list@xxxxxxxxxx>
Sent: Thursday, January 04, 2001 6:13 AM
Subject: Statue to Greenspan/Re: the Fed
> Felix wrote:
>
> > Wallstreet should one day show its gratefulness to Greenspan by putting
his
> > statue riding the bull.
>
> But Greenspan isn't responsible for the Bull market, no more
> so than Bill Clinton. This connection is naive and just stand
> up to scrutiny. A study of hikes and cuts along side the
> longer history of the stock market over the last 70+ years reveal
> that interest rates have only the shortest term affect on investor
> psychology. If rates controlled the market, it wouldn't have
> continued to climb from the depths of the '74 bear while rates
> continued to ratchet up to their highest in recorded history,
> nor would the market have continued to crash in '30 when rates
> went affectively to zero.
>
>
>
|