y2k newswire members only postinggreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
It's not every day the Chairman of the Federal Reserve tells Americans they're about to make history. Not the kind of history they want to make, it turns out -- they're about to break every financial record in history by creating, then crashing, the largest bubble market ever witnessed by man.
In Greenspan's own words, speculating about what might be said about bubble.com in ten years: "...[a] 2010 retrospective might well conclude that a good deal of what we are currently experiencing was just one of the many euphoric speculative bubbles that have dotted human history."
Those are the words of Alan Greenspan. The Washington Post added, "Greenspan also repeated concerns he has expressed in the past that the huge runup in stock prices could without warning reverse itself."
That's code for "market crash."
Of course, Greenspan has spoken before. Many times, fact. Remember "irrational exuberance?" Remember the LTCM multi-billion-dollar bailout? Remember when the Dow was only at 7500 and Greenspan was already sweating it?
Now the Dow market is nearly 12,000. The NASDAQ has almost reached the number where the Dow SHOULD be! And yet the market continues to rise. So why should we believe Greenspan this time?
THE RATE HIKE COMETH "Never fight the Fed." Those are words of wisdom from professional investors who understand the power of the Federal Reserve. And yesterday, Greenspan virtually promised to raise rates yet again.
Dice-rollers take note: this is the fourth such rate raise from the Fed. Y2K Newswire predicted this rate raise. We told you Greenspan had declared war on the speculative Wall Street bubble, and we urged you to stay on the sidelines, protecting your money, to see what happens.
Today we're urging you to back away even further: the shockwave from this crash is going to hit hard. Don't be anywhere near this crashing bubble when Greenspan finally gets his way. Why? Because skyrocketing markets never come to a soft landing. Speculative blow-offs always -- always, always, always -- crash suddenly, without warning. This one will, too.
Fox News also reported on Greenspan's decision to bring this stock market crashing down. In their words, "Federal Reserve Chairman Alan Greenspan said on Thursday the U.S. central bank is intent on defusing mounting imbalances in the nation's booming economy." Did you read that carefully enough? These are thinly-veiled codewords: the Fed will "defuse mounting imbalances" one way or another. What is this "imbalance" to which Greenspan refers? It is the stock market, of course! To paraphrase the sentence: "Greenspan said on Thursday the Federal Reserve will bring this market back down to reality one way or another."
This is not rocket science, people. Greenspan is advertising this, nation-wide, to anyone who will listen. He is determined to crash this market, and he has the power to do it.
THE MAGIC DATE February 2. That's when the Fed will once again raise rates. This is the fourth rate raise in seven months.
The important questions from here on out are: 1) Will Wall Street investors wake up and face reality? Or will they continue to buy anything that moves, oblivious to the laws of economics?
2) If the market does react and slow, will the public pull their stocks right away, or will they think this is just another "buying opportunity?" And at what point does a "buying opportunity dip" become a real crash? How will non-professional investors make that decision?
3) What will be the overall economic impact of a massive market crash? Will we walk out of it, unscathed, like we did with Y2K, or will this be the real deal that doesn't go away overnight?
Of course, we can't answer these questions outright, but we can answer one question: will the Fed keep raising rates until these "imbalances" are corrected?
The answer to that question is YES. Never fight the Fed.
-- roofer@topodehill (email@example.com), January 14, 2000
Jim Grant points out that last fall the Fed increased M3 by a phemomenal rate to prepare for an expected y2k liquidity crisis, and is right now withdrawing this money. Grant watches the Fed balance sheet and monwy flows very carefully. Last night Greenspan clearly was warning anyone who would listen that money would be getting tighter and tighter. No question that when one may get a home loan for 125% of the equity in the home that there is loads of Fed created money sloshing around.
It would be a great irony indeed if the most devasting effect of y2k was the vast expansion, then contraction of the money supply by the Fed. Most government actions have unintended consequences, and the Fed's vast increase in M3 this fall may turn out to be one for the history books. The best book on market manias is "Extraordinary Popular Delusions and the Madness of Crowds", Charles Mackay, 1848.
-- Les (firstname.lastname@example.org), January 14, 2000.
Actually, although "The Madness of Crowds" is the traditionally mentioned "classic," I strongly recommend a book I just finished reading last week:
"Devil Take the Hindmost: A History of Financial Speculation" by Edward Chancellor, published 1999.
Sorry I don't have it in front of me so can't tell you the publishing house.
It is simply superb and should replace "Madness of Crowds" as the book to refer interested persons to; evidence of this may be that although first published in 1999, the edition of Chancellor's book I bought was in its FIFTH printing already.
--Andre in southcentral Pennsylvania
-- Andre Weltman (email@example.com), January 14, 2000.
Devil Take the Hindmost: A History of Financial Speculation
-- (Up@and.down), January 14, 2000.