Marginal Thinking

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Date: Mon Feb 28 2000 - 04:52:46 PST

SLATE MONEY: Mon., Feb. 28, 2000

--moneybox: Greenspan's Thinking on Margin Requirements

By James Surowiecki

It's not clear what we're really supposed to take away from this,
and while normally Greenspan's words are difficult to decipher
because he's being cryptic, in this case I think they're difficult
to decipher because he may not be sure himself about what the
actual connections between the stock market, the wealth effect, and
the real economy are. But what was interesting about yesterday's
appearance, though it drew little notice, is that Greenspan was
perfectly clear about whether the Fed should raise its margin
requirements for investors as a way of taking a little air out of
the supposed stock-market bubble."

Copyright (c) 2000 Microsoft and/or its suppliers. All rights reserved.

Greenspan admits it doesn't work, and, as Surowiecki points out later on in
the article, Greenspan is usually right. I wonder what the unintended
consequence of fewer (read elite only) people being able to participate in
higher riskinesses will mean. RGR policies - I hate 'em.

(Tom, you figure out the TLA)


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