>>> [EMAIL PROTECTED] 01/08/01 01:11PM >>>
Charles Brown quoted:
>DaimlerChrysler to shrink Chrysler group
>Zetsche calls downsizing inevitable
So what's the point here? The 42% increase in real GDP since the
1991Q1 trough didn't happen, or wasn't worthy of note? Only
downsizing is economic news? Please enlighten.
Doug
(((((((((((
CB: Here's some enlightenment on this news from a writer in _Feed_. The above is on
the same "slowdown", and worthy of note.
______
Actually it was the NASDAQ that was going down the tubes, but brokerage-house analysts
sometimes have a hard time telling the stock market from the real world. But over the
last month or two, there'd been a cascade of signs that the economy was stumbling.
Employment growth, which had been strong from 1993 through the first half of 2000,
slowed markedly at year end. Dot-coms were collapsing, retailers had a cheerless
Christmas season, and surveys of corporate chief information officers showed that
firms were sharply throttling back on their plans to buy new computers and other
high-tech equipment -- the very gadgetry that had helped drive the expansion and fuel
exuberant narratives about the New Economy.
Daily | 01.08.01
Mr. Bubble
Doug Henwood on Greenspan's latest cut
THOUGH WALL STREETERS love to denounce the government as a bothersome and inept
intruder on economic affairs, they change their tune when the markets hit a rough
patch. No finer example of this contradiction can be found than last week's initial
reaction to the Federal Reserve's surprise cut in interest rates. Within seconds of
the announcement, stock prices headed skyward and paeans to Alan Greenspan's magical
powers issued from the lips of traders and money managers. Bruce Steinberg, Merrill
Lynch's chief economist, was widely quoted as saying, "The Fed won't permit the U.S.
economy to go down the tubes."
Actually it was the NASDAQ that was going down the tubes, but brokerage-house analysts
sometimes have a hard time telling the stock market from the real world. But over the
last month or two, there'd been a cascade of signs that the economy was stumbling.
Employment growth, which had been strong from 1993 through the first half of 2000,
slowed markedly at year end. Dot-coms were collapsing, retailers had a cheerless
Christmas season, and surveys of corporate chief information officers showed that
firms were sharply throttling back on their plans to buy new computers and other
high-tech equipment -- the very gadgetry that had helped drive the expansion and fuel
exuberant narratives about the New Economy.
Of course, one of the major reasons for that slowdown was the series of interest-rate
hikes that Greenspan's Fed had engineered throughout 1999 and early 2000. Greenspan
had been worrying publicly for several years about the dwindling "pool of available
workers," as he frequently put it. Such a shortage might lead to -- gasp! -- wage
increases, which could, Greenspan helpfully explained, bring "our growing prosperity
to an end." So, to head off that dire fate, Greenspan & Co. pushed up interest rates,
leading first to some serious stock-market carnage, and then signs of a weakening of
the real economy. Dr. Greenspan's cure, it would seem, also threatened to bring our
prosperity to an end. So now our economic physician comes in with another cure -- a
reversal of the course that had seemed like just the right regimen only a few months
ago.
Greenspan hasn't died yet, but it looks like nearly everyone is ready to canonize him.
While we're all supposed to be celebrating the beauties of the unfettered free market,
we're also supposed to revere a public servant -- a very well-paid one who runs a
branch of government that earns an annual profit of twenty billion, but still a public
servant -- as the wizard who keeps it all going.
A brief review of his record might inspire some second thoughts. During his term in
office (which began in August 1987), we saw the great stock-market crash, the final
years of the Roaring Eighties leveraging mania, the climax of the savings-and-loan
debacle, a long economic stagnation (roughly coinciding with the first Bush
presidency), the famous "jobless recovery" of the early 1990s, and several killer
international financial panics (Mexico in 1994, Asia in 1997, Russia in 1998). If this
is a godlike record, I'd hate to see what a mere mortal's would be like.
But all that is history (as that curiously American way of consigning something to
insignificance puts it). The big economic question of 2001 is just how this little
slowdown plays itself out
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