Japanese Finance Minister Kiichi Miyazawa said on Sunday that Federal Reserve Chairman Alan Greenspan had told him that the U.S. import binge could not last forever.

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

TOKYO (Reuters) - Japanese Finance Minister Kiichi Miyazawa said on Sunday that Federal Reserve Chairman Alan Greenspan had told him that the U.S. import binge could not last forever.

With the wealth effect in the United States, money was not being made from producing goods and services and so had no outlet but through imports, Miyazawa quoted Greenspan as saying in a weekend meeting during a gathering of finance ministers and central bankers of Group of Seven rich nations.

``At this point what's troubling him is that the money is going into imports, and this may be good for the people of the world but for the American economy this cannot continue for long,'' Miyazawa said, speaking on a television talk show.

Miyazawa said he had told Greenspan that he believed the U.S. stock market rise was a bubble and an adjustment was inevitable.

``I asked Greenspan if he had given a warning signal to the market so that people later could not criticize him for doing nothing, and Greenspan just laughed,'' Miyazawa said.

Despite Greenspan's frequent flagging of a red light against the excessive rises in stock prices, the market had taken his warning as a green light, Miyazawa said.

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Greenspan is on the hook for allowing this MANIA to continue as long as it has. Will he have the GUTS to write ir's epitaph?

Ray

-- Ray (ray@totacc.com), January 23, 2000

Answers

I would see this foreshadows much higher interest rates, a weaker dollar and a return of inflation.

It looks like paying off variable rate debts is important and hard assets like gold and silver are in for a strong move up.

-- Bill P (porterwn@one.net), January 23, 2000.


Soooo,

The slowdown is baked in the cake...probably Greenspan knows by now just what REALLY broke and what did not!!!

He has to get out in front of this...could he start draining soon???

Like maybe a FULL point on the Fed Funds rate in ONE whack?!?!?



-- Z (Z@Z.Z), January 23, 2000.


A full point, not in this chairman's reign. 1/4 point will not be well received, 1/2 point will more than likely get a better intial market reaction. Anything more than 1/2 would cause a panic becuase this would be seen as a panic move. The malls in central Ohio were swarmed as reported by my wife. The US public is going to have to be hit by a two by four before they understand No you can't spend your way into prosperity.

-- Squid (ItsDark@down.here), January 23, 2000.

Z,

I think Gordon called this one as a quarter now to prove things won't sink, then a half on the next go. If the spanman does a half now, he would too accurately telegraph his own fears to the market. If we get a half now, then the spanman is really spooked. A full point would be the end of the market as we know it - i.e., no soft landing for this market and the knock on from the suddenly aborted (so called) 'wealth affect' would also tank the economy. Andy's cry of 'got gold?' could become the watchword of the decade.

Just as a contra to my own thoughts, I should note that some would say the full point scenario would validate the spanman's early years as a follower of the Ayn. Naaaa.... he would never do anything to make Andy happy.

Econometrically Challenged,

-- Uhhmmm... (JFCP81A@aol.com), January 23, 2000.


Yep, old Kiichi told me this very same thing last week before we caught the Galactic Cowboys concert.

-- Billy Vyper (billy_vyper@postmark.net), January 23, 2000.


The tech stocks could give a f..... f... about interest rates,that's not where they get their money and this market knows that. Raising rates only hurts those left behind in this mania,ie. majority of Dow and S&P, now interest rates are important to them.How to deflate the bubble? Hey ! how about oil , can't blame the fed for that

-- James (brkthru@cableone.net), January 23, 2000.

James:

Oil is an issue, only the techs don't give a ...hoot about the price of oil either. Look Dow sinks lower and Nasdaq jumps to new highs. Looks like late money chasing after old returns. Could very well be the end-game for this bull market.

You have hit upon the big question for the fed, how do you lower the tech market frenzy, and keep the general economy from a tailspin. Answer; later the saving the market considerations go out the window.

The oil question is more of a leading indicator than the fed action. If oil truly does have problems the economy of the world taks a direct hit. The economy's tanking mean less demand for oil, back to the game of chicken that the big players are playing with each other. Being a somewhat amused bystander I wonder if it really matters if any of the players blink.

The rate hike is now a forgone conclusion and the amount isn't the most important item. Greenpsan hiked rates last year while flooding the market with liquidity. Many now assume that Greenspan will always step in to save the big money and their (ours?) banks. Maybe the fed will be forced to allow "some" disruption to gain any credibility.

Once again look at people's actions, nobody is listening. They will get hit hard and squeeel the loudest about how unfair life is.

We rely on Arab and Ven oil, Asian imports, and Japanese financing our debt. How many of these players like us very much?

-- Squid (ItsDark@down.here), January 24, 2000.


Here is a good thread and link from BBC on this subject.

link

-- snooze button (
alarmclock_2000@yahoo.com), January 24, 2000.


From this point forward ,everything the Fed does is for the banks. They are the ones who will be holding all the overencumbered paper this equity/asset inflation has created.

-- James (brkthru@cableone.net), January 24, 2000.

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