Fed not fazed by talk of fresh U.S. asset bubble (Greenspin ignores)

[54anickel]

I posted this in LBN as well. Greenspin ignored the last bubble, looks like he's going to do it again.

http://www.forbes.com/home_asia/newswire/2004/02/18/rtr1265822.html

snip>
Although consumer inflation remains very low, asset prices are surging again and investors are taking ever greater risks to make a buck, potentially creating other imbalances.

U.S. blue-chip stocks last week touched a 32-month high, helped by signals from Fed Chairman Alan Greenspan that he is in no rush to lift interest rates from 1958 levels. The housing market shows little sign of cooling and the premium investors demand to lend to companies is the lowest on record.

The Fed has ended up "with an economy addicted to rock-bottom nominal interest rates," said Stephen Roach, chief economist at Morgan Stanley.

The Fed decided not to tackle the 1990s stock bubble with higher interest rates, instead preferring to mop up the after-effects with a massive jolt of 13 rate cuts -- a strategy Greenspan declared "successful" last month in a burst of self-congratulation that critics warned was premature.

[gristy]

1. Well, good!

My house goes on the market in a couple weeks. After I sell, the housing market can do whatever it damn pleases. There is little doubt in my mind something's going to blow. Big time.

Actually, I would much prefer a stable economy, stock market, housing market, and interest rates. But then how could the scam artists make a buck? That's the bottom line...

[FloridaPat]

2. Things have to look good for the election. I found it interesting

that Greenspan kept raising the interest rates during Clinton's last term. I understand a lot of foreigners invest in the market. Why would anyone invest in the US stock market instead of Euros? Right now big donors to Bush are the financial institutions. They make a fortune if Bush's social security idea goes into law. The mutual funds had billions sitting on the sidelines for the last couple of years. How about, put that money in the stock market. Plus some fed money I'm sure, make things look good for Bush and make billions when social security gets dumped into the market through fees. Sounds like a plan.