[RT] Re: Alan Greenscam, Public ENEMY Number ONE

[nwinski <nwinski@xxxxxxxxxxxxxxx>]

   The dilemma I see is that this huge spike in oil prices is threatening the
world economy. $30 + for
oil is inflationary and the price of just about everything will be going up in
the next few months. Given the outlook for both inflation and recession, which
dragon should Greenspan fight?  Should he raise interest rates to fight
inflation and possibly exacerbate any possible recession? Or does he do
nothing and risk letting inflation get out of hand?  That is a dilemma that is
a very real possibility and no one is talking about it.

   Now, let's think about why OPEC would want to jack up oil price to the
point it could cause a recession or economic slowdown in an election year?
They have been aware that the high oil price could be a problem for the world
economy for several weeks, but have done nothing but pay minor lip service.
Could it have anything to do with a Texas (read Oil friendly) governor is
running for President and a nice little recession could help plant a Bush in
the White House?  I wonder?

Cheers,

Norman

P.S. Gore says he invented the internet and Bush is Gov. of Texas and was in
the oil biz. This Gore vs. Bush race seem to me like an interesting metaphor
for our society and economy as the "new ecomomy i.e. internet" battles the old
economy i.e. Oil do battle for supremecy.

Daniel Goncharoff wrote:

> It is important to understand the problem faced by Greenspan.
>
> The market goes up in an 'irrationally exuberant' way. He says he will
> take away the punch bowl as soon as he sees signs of the party getting
> out of hand, ie, when he sees inflation rise.
>
> The economy keeps growing at a healthy pace. But inflation doesn't rise.
> Instead, the increase in wealth from the stock market is reinvested, not
> spent.
>
> This leaves Greenspan with a dilemma. Does he raise interest rates
> anyway, risking stifling the economy and creating a deflationary
> environment? Or does he wait for signs of the stock market bubble
> translating into artificially higher asset prices?
>
> Obviously, he has done the latter. But inflation is not there. The
> wealth effect is much smaller than economists would have expected.
>
> The FT recently had an article saying that spending patterns of
> individuals reflect a 75% expectation of a serious market downturn.
>
> Perhaps it would have been better to assume that raising interest rates
> would not have an important economic impact. Perhaps not...
>
> Regards
> DanG