Exhibitionist's Corner

[ender]

101Dahlias - There is more to it. Forgive me for being long winded.

Greenspan is chairman of the Federal Reserve - appointed by the President. Greenspan is said to be actually one of the more moderate members of the FED. If there is enough negative sentiment the President will get someone else.

Yes, Greenspan and the FED probably overreacted last year with the number of interest rate hikes and didn't act soon enough with interest cuts. And I won't argue that members of the FED may take advantage of "insider information" concerning money policy.

But, please remember what happened in Japan with their stock market. The Japanese saw a market boom like the 1999 NASDAQ. The more over-valued the Japan market became, the more people threw money into. It had been described as a frenzy. Their market became incredibly over-valued and their bubble burst hard, years before it did for the 2000. Japan's market has still not recovered.

Please take a look at the US markets in 1999 and the first part of 2000. Many stocks were rising to ridiculously high prices with no chance of ever having the earnings to back up their valuations. People borrowed money to put in the markets and it looked like the US was following the same path as Japan. Although Greenspan denied trying to influence the markets he many times warned that stocks were overvalued; and then the FED raised interest rates. The interest rate hikes were said to be to head off inflation, but I think we know better. They were intended to tighten credit.

Eventually, highly respected (at the time) analyst Abby Cohen made statements that stocks were overvalued and the market declines began. Other analysts said that she did what Greenspan had failed to do. Start a market correction and return sanity to the markets. Unfortunately, it looks like the FED over did it with interest rate hikes and the economy for the moment is dead in the water.

The point I'm attempting to make is that as painful as this market decline has been (and for most it may get worse), if the FED had not put the brakes on many more people would have continued to invest borrowed money until the resulting decline would have been much more catastrophic. People may have been ruined financially by current events, but it could have been so much worse if the FED had not acted. Now if only they had acted with fewer interest hikes and sooner interest cuts. But, the effect of such things are hard to judge.

Notice how most people don't pay much attention to stock analysts anymore? Many feel that the real villians were the stock analysts and brokers who urged people to keep buying when stock prices were so high that their value had no basis in reality. I for one share this opinion.

CIAO