-Caveat Lector- from: http://www.aci.net/kalliste/ Click Here: <A HREF="http://www.aci.net/kalliste/">The Home Page of J. Orlin Grabbe</A> ----- World Stock Markets Oops! Stocks Fall Down. Go Boom. It must be that Y2K end to irrational expectations. The prospect of rising interest rates in the United States and Europe pushed major stock indexes down sharply Tuesday, although analysts said the drop probably reflected investors cashing in some of the spectacular gains of last year. ''Nobody ever lost money taking profits,'' said Lawrence Kreicher, chief economist of Alliance Capital Management. He predicted interest rates on bonds would end the year below current levels after rising in the first half. The sell-off began in European trading, with key indexes falling from 2.4 percent in Frankfurt to nearly 5 percent in Amsterdam, where the market suffered from weakness in Baan NV, the corporate software concern. Earlier, Asian markets were mixed, with sharp gains in Indonesia, South Korea, Taiwan and Thailand, but weakness in Hong Kong, whose large real estate sector is sensitive to rising rates. On Wall Street, the Nasdaq composite index, which gained more than 85 percent last year, plunged 229.99 points, or 5.6 percent, to 3,901.16. That was the biggest percentage decline in 18 months. The Dow Jones industrial average dropped 3.16 percent, to 10,999.17. As fears receded that the Y2K computer bug would cause economic disruptions, investors' attention turned to speculation U.S. and European central banks would push interest rates higher. The central banks made copious amounts of cash available ahead of the New Year in case there had been computer problems but are now reclaiming the money and are expected to push interest rates up to combat inflationary pressures. Inflation has yet to show up in significant price increases for consumer goods and services, but stock prices had good runs in several markets last year, with significant gains in the past two months. There is a feeling equities have gotten ''ahead of themselves,'' as Eddie George, the governor of the Bank of England, said. He reminded investors that stock speculation is ''a risk.'' ''We've been looking at the strength of the U.S. stock market for three years now,'' Mr. George said in a radio interview, ''and the possibility that there will be a sharp break.'' In the past three years, the Dow has risen by about 80 percent while the Nasdaq index, driven by technology stocks, has more than tripled. During that period, the U.S. economy grew at a relatively fast clip of about 4 percent a year, about twice as fast as many economists had thought it could. The Federal Reserve Board cut interest rates three times in 1998 to counteract economic weakness. Last year, the Fed recouped those cuts, but that merely brought its target for overnight loans among commercial banks back to the 5.5 percent rate where it had been. Now, with growth picking up in Europe and Asia, the outlook is for further increases. ''We really have a situation here with the equities where people are understandably concerned about what might be going on with interest rates,'' said Mr. Kreicher. With the Fed pushing up short-term rates, he said the long-term Treasury bond yield could rise to 7 percent in the coming months. By the end of the year, however, he predicted the 30-year bond would return just 6.25 percent. The yield actually on fell Tuesday, to 6.53 percent from 6.62 percent on Monday, benefiting in part from money flowing out of stocks. Some of the enthusiasm in the bond market was linked to the reappointment of Alan Greenspan as the Fed chairman, according to David Kidwell, dean of the Carlson School of Management at the University of Minnesota. He credited the investments in technology by U.S. companies this decade for the good performance of the economy. Mr. Kreicher concurred and said the investments in computers and communications would increase productivity, setting the stage for rising stock prices and lower bond yields later this year. On Tuesday, however, fears of impending rate increases weighed on financial stocks for a second day, and Citigroup, J.P. Morgan and American Express were among the leading losers in the Dow industrials. Unlike Monday, technology stocks did not buck the trend, and Hewlett-Packard was the biggest drag on the Dow, while such 1999 stars as Dell, Qualcomm and Oracle drove down the Nasdaq. International Herald Tribune, Jan. 5, 2000 The Second Coming Save Us, Oh Blessed Greenspan! How merciful are thy monetary policies! WASHINGTON - President Bill Clinton on Tuesday nominated Alan Greenspan to serve a fourth term as chairman of the Federal Reserve Board, saying that his leadership had ''inspired confidence not only here in America but all around the world.'' The move signaled continuity on the path of strong and steady economic growth and also helped remove the Fed chairmanship from the political arena in a presidential election year. Mr. Clinton, in making the White House announcement, thanked Mr. Greenspan for agreeing to continue serving while ''at a pinnacle of success.'' The chairman, a vigorous 73-year-old, has served in the post since his appointment by President Ronald Reagan in August 1987. When Mr. Greenspan was appointed, one cartoonist portrayed him as a midget dwarfed by the big shoes of his predecessor, Paul Volcker. Mr. Greenspan since has emerged as a widely respected steward of remarkable economic growth, blessed by low inflation and low interest rates, that has accompanied most of the Clinton administration, bringing the United States its longest peacetime expansion. The Fed chairman enjoys broad support among both politicians and investors after helping calm markets during the U.S. savings and loan crisis of the late-1980s, the collapse of the Mexican peso in 1994-95 and the Asian currency crisis that began in mid-1997. Mr. Greenspan has achieved that, analysts say, despite dramatic transformations that have marked his tenure, from the end of the Cold War to the advent of Internet-based commerce and the astonishing high-tech growth that has created millionaires by the thousand. The economy has performed in ways once thought impossible. During 1999, it grew at a rate of about 5 percent, which economists once figured would lead to increases in wages and prices. Mr. Clinton, whose re-election in 1996 owed much to the strong economy, had made no secret of his plan to renominate Mr. Greenspan, a Republican. ''I have enjoyed a very good relationship, both personally and professionally, with Mr. Greenspan,'' the president said last year. ''I think he has done a terrific job.'' Mr. Greenspan took office two months before the stock-market collapse of October 1987, then in 1990 and 1991, the country endured a nine-month recession. But for the past nine years, the economy has continued to expand, and next month the expansion is set to become the longest on record, eight years and 11 months. Mr. Greenspan has been credited as the steady hand who has helped keep the economy on track. Mr. Greenspan's four-year term expires in June, but with solid support in Congress, he is expected to face easy confirmation by the Senate. The announcement in any case should remove Mr. Greenspan as a possible issue in the presidential campaign this year. Governor George W. Bush of Texas, the Republican front-runner, last year urged Mr. Clinton to announce his intentions regarding Mr. Greenspan early in order to remove the uncertainty as an issue in the campaign. Had Mr. Greenspan not been renominated, there was speculation that former Treasury Secretary Robert Rubin or his successor, Lawrence Summers, might have been considered to head the body sometimes called the ''fourth branch of government,'' in addition to the legislative, executive and judicial arms. Mr. Clinton, in making the announcement, thanked Mr. Greenspan, saying that the Fed had made ''provably wise judgments about our monetary policy.'' Mr. Clinton praised the chairman for ''a rare combination of technical expertise, sophisticated analysis and old-fashioned common sense.'' ''His wise and steady leadership has inspired confidence not only here in America but all around the world,'' he said. Mr. Greenspan thanked Mr. Clinton for his confidence, praised the White House team of economic advisers, and said the Federal Reserve had been ''a remarkable institution'' to work for. ''I have enjoyed every minute of it,'' he added International Herald Tribune, Jan. 5, 2000 ------------------------------------------------------------------------ Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations. Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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