From: Jeff Bone (email@example.com)
Date: Wed Feb 14 2001 - 13:52:43 PST
I read Bob Woodward's Greenspan book, _Maestro: Greenspan's Fed and the American
Boom_ while snowed in over Christmas. Definitely worth reading. Thing I can't
figure: given Greenspan's history and his Randite philosophy, both the last year
*and* the abrupt about-face don't really track for me. Weird stuff.
I agree with Mark Anderson in his thinking in this article.
Esp. the "frustrating year" part.
John Klassa wrote:
> 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 water!!!
> 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
> frustrating year.
> 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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