From: John Klassa (email@example.com)
Date: Wed Feb 14 2001 - 06:57:24 PST
The Fireman turns it off
So, driving back to work one day you pass this house, maybe the nicest
one on the block, maybe even the nicest house you've ever seen. What
would happen if it caught on fire? Oh, that would be a horrible thing,
so horrible that, in your worry, you decide to back up: perhaps now
would be a good time to start wetting it down! After all, the house is
so very large, and so very beautiful -- if there ever were a real fire,
by the time you got the call it would be much too late.
For a year or so, you shoot all of your hoses into the house.
Then, suddenly, you awake, as though out of a nightmare, the hose in
your hand, water running out of every door and window. Time to turn off
The Fireman has struck again.
Will Alan Greenspan's full-point reversal, in two steps in less than
a month, make up for the mistake of six rate hikes in a row? Or has
his tilting against the Nasdaq Composite ($COMPX) in a tragic Sancho
Panza-like routine left the U.S. and world economies too damaged, even
as the stock index climbs again?
All of which brings us to the The Fireman Recovery Program:
Step One. Alan, promise the country (and world) that you will NEVER
again try to manage the U.S. economy by trying to manage the Nasdaq (or
any other equity market). What a rotten idea, and one far beyond the
Federal Reserve's charter. No thanks, we didn't ask for that favor.
Step Two. Repeat after me, 100 times: Strong economies with low
unemployment and near-zero inflation and steadily rising productivity
are a GOOD THING, GOOD THING, GOOD THING ?
Step Three. Close your eyes and pray that you have not just found
yourself a reputation as The Man Who Wrecked The World Economy. Drop
interest rates one more quarter point for psychological/market reasons,
because that's about all one can do at this late date, and watch as we
take three to six months' worth of reports of economic damage, day after
day, waiting for those rate reversals to kick in.
Step Four. Whenever you think the Fed knows what is going on in the
U.S. economy, just review the minutes from the Dec. 19 meeting (made
public last week). Your governors and your economists all agreed that
the economy was just where you wanted it.
Step Five. Take a long vacation. Don't answer any calls. Enjoy the
view. Bring your charge card, and spend money. And, above all...
Step Six. Do not go anywhere near a fire engine.
My guess: I think we have three to six months of self-inflicted pain to
go through here, with a pickup by September. For SNSers who have watched
the whole cycle of unnecessary damage since this began, it's been a
-- John Klassa / Cisco Systems, Inc. / RTP, NC / USA / firstname.lastname@example.org / <>< [ Save bits! Don't quote entire threads in your reply. ]
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