Table On-Topic Summary - 10-Oct-2002
A compilation of this board's financial/economic posts From 43425 to 43488

Post  43425  by  lkorrow       Reply
Pace, roof, You're not joshin' on this market. yikes. Here we are at 7286, we'll see if that 6500 comes about. I wonder how long 401K people will hang in. And crazy gold stocks are down, wish I sold them all! Looks like the world markets, at least mine, are a mess. CNBC's following Roach's direction, saying markets will not recover next year. What a mess.

Post  43426  by  uponroof       Reply
no crime to be right my friend. I just wish I knew how to make better money at it!

As for 2 years ago...

Reminds me of the CNBC interview back then with Fleck in the hot seat. Bill Fleckenstien was a very tasty target for the bulls after such a run up in the markets. The host inquired where Mr Fleck thought the markets would go. He casually told the anchor "the markets will halve". The host, astonished, asked "which markets?!" Fleck answered "all markets". Well the host wasted no time embarking on his best rendition of "you're not serious".. a special disdain reserved for all less than bothersome bears at that time.


Today our friend Ted David on CNBC expressed frustration and even anger that long time stock picking guru AJ Cohen would not return his calls regarding a request for an interview. Seems Ms Cohen is keeping a low profile these days given her pathetically bullish calls, month after month, in spite of overwhelmingly bearish fundamentals. btw has anyone seen perma bull Joe Battapaglia recently?

Nevermind...not nice to gloat.

As far as vindication goes, don't look too far. It's right under your nose....and this is just the beginning:

Speak loud and speak often as I and many others appreciate your posts. The truth is far more powerful than mere critics of it.

Good Luck


Post  43427  by  uponroof       Reply
Hi Linda...the news de jour couldn't be worse.

Ford and the big thre are acting like gummint bailout targets. $6.7 billion behind is Ford on their pension funding. They are at the end of new car zero percent financing ploys as their lower credit rating dictates higher interest rates down the line. This is one nasty spiral that has some serious steam left in it.

Every day it's a new reason to hunker down and once the consumer gets a good wiff of what's really going on (they are still not completely tuned in) it will be disaster.

Good Luck


Post  43428  by  supreme-apg       Reply
Iraq is more like Grenada than you know. They used to have the world's fourth largest military. Perhaps, if you were to count all the women marching with rifles, all of them without magazines, and the children adorned with scarves then by the numbers, they are large.
So are the Chinese.
They cannot mobilize, thus all of them are sitting ducks. The biggest threat the Iraqis pose are simply, though not really simple, (N)BC, Hussein's knack for using untested weaponry, and the notion that the Iraqis are quite dedicated to their leader.
All of that is containable. The Saudis and Israelis will shoulder most of the dictator's ire. But once expended, the threat will be minimized quickly.
Is seems that overthrowing Hussein is the cornerstone of the initiative and the prospect of executing that mission with house-to-house combat has dire consequences. However, judicious use of technology installed and administered by GFAC special forces will win the day and the Iraqi incursion will take all of forty days from start to finish.
It is the "What then?" that is more consuming. But with the Israelis helping out, and Jordan accepting payments of water and cash by them for over-flying their country the engagement will be successful and brief. We can certainly use the help and should embrace it into the Coalition. I don't recommend waiting for the French, though I do suggest that voiding their contracts for Iraqi oil may sway them to moderate that stance. I don't think the same could be used against the Russians.
Iran is next. What we do after may be simple as well. Let them do what they will. We can nearly undo just about anything, with the exception of (N)BC. The threat of radical muslim nations is the leadership, not the people and it is a study in economics' "diminishing returns" that will ultimately guide them, and us, to a suitable ending.
Of GW and TD? Well, neither of the two is very good at playing politics with this issue, though TD's enlistment of Sen Byrd to be the fall-guy for the Dems may be an ingenious coup. Byrd isn't going anywhere and with him heading the opposition, fallout isn't likely to affect the real Dem wannabes. GW is doing the best he can, given the opposition. Both are embracing the impending Iraq Conflict, but TD is using it to defer public notice of Dem initiatives to thwart Rep initiatives.
Neither of them wants to be caught dead touting the economic collapse as it is a battle that cannot be won by either side. Loopholes and rules enacted and used by both sides of the aisle have led us here. So while we destroy Hussein's legacy with military action, it is the fight for control of the U.S. Senate that is the more defining and dangerous, though not deadly.
And so it goes. To the voters in states set to choose Senators I can only say choose wisely and please do vote. Pick a winner. Pick your nose. Heck, pick up sticks, but please cast your vote. The nation will remain confident that it can correct any errors at the next election. You do your part. We'll do ours. Life goes on... and so shall we all.

Post  43429  by  clo       Reply
Merrill downgrades GE to neutral...Merrill is just a little late to the depression party, as usual! clo

LONDON, Oct 10 (Reuters) - Investment bank Merrill Lynch
said on Thursday it had downgraded industrial conglomerate
General Electric to "neutral" from "buy" and cut its
earnings forecasts ahead of third-quarter results due on Friday.
Merrill signalled that GE may find it difficult to meet its
earnings targets and said it had lowered its 2003 earnings per
share forecast to $1.65 from $1.7.
"While the company signalled at its analyst meeting on
September 26 it will make the $0.41 consensus estimate, the
fourth quarter appears equally if not more challenging even
though GE also reiterated its comfort with its previous $1.65
guidance and therefore implied $0.45 for the quarter," said
Merrill Lynch analyst John G. Inch.
GE shares closed almost six percent lower at $22 on
((Natalie Waters, London Newsroom +44 207 542 1438 fax +44
207 542 2120,
For research reports, go to Reuters Broker Research on
Reuters Web at
*** end of story ***

Post  43430  by  clo       Reply
SBC Communications fined 6 mln usd by US telecoms regulator

WASHINGTON, Oct 09, 2002 (AFX-UK via COMTEX) -- SBC Communications Inc has been
fined 6 mln usd by the US Federal Communications Commission for violating a
competition-related condition that the FCC imposed when it approved the 1999
merger of SBC and Ameritech Corp, the FCC said.

"In this order we impose a 6 million forfeiture against SBC, the highest in the
history of the Commission. I fully support this action which penalises SBC for
serious violations of our local competition rules," FCC chairman Michael Powell
said in a statement.

"It is a further demonstration of our commitment and resolve to ensure effective
enforcement in this area," Powell said.

In approving the 1999 merger, the regulator required SBC to offer the shared
transport unbundled network element in the former Ameritech states on terms at
least as favorable as those offered to telecommunications carriers in Texas as
of August 27, 1999.

On January 18, 2002, the FCC issued a Notice of Apparent Liability (NAL) finding
that it appeared "that SBC had willfully and repeatedly violated this
requirement in each of the five former Ameritech states by restricting the use
of shared transport by carriers providing intraLATA toll service." The NAL
proposed to issue a forfeiture against SBC for the statutory maximum of 6 mln
usd, and provided SBC with an opportunity to respond.

In today's order, the FCC rejected all of SBC's arguments in response to the

The FCC emphasised that SBC had willfully and repeatedly violated the clear
requirements of the Merger Order, thereby causing delays in the availability of
shared transport, and forcing competing telecoms carriers unnecessarily to
expend time and resources in state proceedings to enforce their rights.

jjc/djp NNN

Copyright 2002. AFX News Ltd. All rights reserved.


KEYWORD: United States of America
INDUSTRY KEYWORD: Telecommunications
SUBJECT CODE: Government Regulatory Actions

Post  43431  by  pmcw       Reply
TIVO, Their balance sheet is shaky at best, but their market is expanding rapidly. I know of several major deals they have that will hit the books during the next twelve months. They could be a real jewel in 2003. Regards, pmcw

Post  43432  by  uponroof       Reply
OK....they're really, really, really, really, really...
really going to do something 'drastic' this time.

If this wasn't so dire it'd be comical.

This is warning number 6 or 7 wrt 'drastic' measures
about to be taken in Japan. Should we cry or laugh
at this never ending attempt at inspiring recovery
through embarrassing false bravado? Japan has no answers.

Post  43433  by  lkorrow       Reply
Hi Roof, that doesn't sound very good at all. I'm concerned about the consumer too. Looks like somebody's dumping gold, really taking a dive this AM, but retracing. . . .

Post  43434  by  lkorrow       Reply
pmcw, do you think HLIT will benefit when the AT&T Broadband spinoff to Comcast is completed?

p. s. tried to see three windmills, but it turned out you meeded a four wheel drive to get up the mountain road. I'll have to wait until they build one on LI to see and hear them!

Post  43435  by  danking_70       Reply
Clo re SBC

Any businessperson would choose a 6 million dollar fine if those actions help to put their competitors out of business.

What's the other choice? Multiple billions for SBC to upgrade their technology to match their competitor's technology.

PMCW has been harping on the 1996 Telecommunications Act for quite a while now and rightly so. This was one of the problems from it.

That's why the FCC and the Baby Bells deserve most of the blame for the mess that they have made.

Post  43436  by  uponroof       Reply
Linda...consumer strength

I've read bits and pieces about what is behind this phenomenom. One explanation involves a mass psychosis of sorts.

It seems 911 may have triggered an internal desire to enjoy life while you can....part of that includes spending on yourself despite ominous news.

I don't put this in the patriotic (support America) catagory which was obviously promoted just after the attack. This is based in a deeper understanding that the world has changed for the worse....and in order to not miss anything, spending is required. I can somewhat relate to this as a recent investor in collector cars.

Anyone else out there going through similar rationale experiences (irrational splurging on oneself)?

Post  43437  by  nvrgivup       Reply
Briguy: I just bought some SANM at 1.88. I followed your recommendation a couple of weeks ago and bought at 2.56, then sold at 3.01. It seems like the market doesn't have a very clear idea what stocks are worth these days, so I figured I may as well try a stock that I had good luck with before.

Have a good day, nvrgivup

Post  43438  by  Inspector_32       Reply
decomposed...from the congressional record:

You don't like my sources? Remember there were House hearings on our relationship to Iraq in the 1980's after Reagan took them off the terrorist list. THey conducted an investigation headed by Hentry Gonzalez of Texas. What I find amazing is that while republicans have memorized every detail of Bill Clinton's sex life.....I can't find one Republican who is knowledgeable about the Iraqgate scandal or the Iran-Contra scandal. Strange isn't it? Especially considering how important our past dealings in the middle east are today. Anyway...from the Congressional Record:

U.S. officials insisted in 1989, for instance, on playing down the importance of a scandal involving an Atlanta-based bank and more than $5 billion in unauthorized loans to Iraq, including $900 million guaranteed by the U.S. government. They even intervened in the case to prevent indictment of the Central Bank of Iraq while the Persian Gulf War was raging.

At least six Iraqi front companies in the military technology procurement network received direct funding from the BNL Bank. In addition, BNL loans were used to pay for technology identified by network companies.....

Hundreds of millions of dollars of BNL loans went directly to purchase technology for Iraq's highest priority weapons programs including the covert nuclear weapons development program,

But the truth is different. The administration knew a great deal about Saddam Hussein's military procurement program and made a conscious decision to tolerate it, and in many cases FACILITATED the effort. The Bush administration knew that Saddam Hussein was working on nuclear weaponry, and it also knew that some of the exports it approved were destined for nuclear establishments. The concept seems to have been to play along, let Saddam Hussein get U.S. technology for his weapons programs, and take the risk that he could be controlled.

another good website:

Decomposed I'm not going to post a whoe bunch of can go to the Congressional Record website and read what the findings of the investigation were but it really boils down to this:

Reagan and Bush wanted Saddam to be their little bulldog in the mid-east. they liked him because his govt was non-secular and they thought they could control him. But even though Reagan took Iraq off the list of countries that sponsor terrorism (after Carter had just put them on it), Congress still didn't trust Iraq and limitited all aid to strictly agricultural aid. Reagan Bush knew of, and used BNL bank in Atlanta to funnel huge sums of money covertly to Iraq to pay for these weapons programs. Yes, it was stupid of them to do....and some of the people in those administrations (Cheney and Rumsfeld most notably) are making decisions in this administration as well. I'm not sure I trust their judgement anymore.

what's the comprehensive plan for the middle east? What I'm talking about here is the long-range vision for the mid-east. I firmly believe that in the next 20-50 years anybody who has the money and wants a nuclear weapon will be able to get one. So running around "whacking" everybody that want's one is a bit like trying to put out twenty little forest fires with a might get the first one or two fires but in the long run you're fighting a losing battle. So what are you to do?

Well it's been said that there are two types of power....hard power and soft power. Hard power involves using the "big stick" of the military and that's the easiest one to understand and use. But our biggest strength is really in soft power.

Soft power involves getting people to want the same things we want. No country in the world has more of this power than the US....despite all the anti-western cr@p they spew....most of them wear blue jeans and watch american movies etc. And soft power has a much longer lasting effect....kuwaiti's loved us 10 years ago and they're shooting at us now.

How are we going to transform the region and bring it into the 21 century? Personally I think we need something similar to the Marshall plan. We need to build schools, promote democracy, and help build their economies. Right now the best, most lucrative occupation a young muslim can have is Jihad...we've got to change that.

I'm not against military force but that can't be our end game and so far that's all Bush has offered up. Yes we can whack the taliban and Iraq right now....but the real cahallenge is to make sure we don't have to send our people to go kill 15 year muslim boys who think they've found God on the @ss-end of the world. And if Bush's actions in Afghanistan are any indication...Bush really doesn't have a long term plan for stability.

And please...repeat the question you keep asking me ot answer....I'm not avoiding it, I just don't recall it.

Post  43439  by  Decomposed       Reply
re: HP

Now HERE is an interesting announcement. I hope we don't have a lot of HPQ fans on the TABLE.

From the InformationWeekDaily newsletter, 10/10/2002:

Dell Aims To Drive Down Printer Costs, Says Cartridges Won't Be HP-Compatible

The Next Battleground: Printer Cartridges
Oct. 9, 2002

Speaking Wednesday at a Gartner Symposium, Dell says its cartridges won't be compatible with HP goods, but it will push cartridge costs down.
By John Kreiser

Dell Computer and Hewlett-Packard continue to toss their heads, this time over printers. In the latest tit-for-tat exchange, Dell says the ink-jet cartridges that it's developing with printer maker Lexmark Corp. won't be compatible with HP equipment.
Speaking Wednesday at a Gartner Symposium, CEO Michael Dell said that while the products won't be compatible with HP goods, Dell will push cartridge costs down. "The price for the total offering--printer and supplies--can come down quite considerably," wire reports quoted Dell as saying. "If you look at any other market Dell has gone into, we have been able to significantly save money for customers."

Printer makers, including Lexmark, generally sell printers inexpensively in the hopes that buyers will keep coming back for parts like the lowly cartridge, which is a more profitable item in comparison.

HP CEO Carly Fiorina blasted Dell's printer plans Tuesday. Fiorina said the company wouldn't invest in the R&D needed to enter the industry on its own and that Dell would wind up being "a channel of distribution for somebody that owns the product." The strategy, she said, wouldn't prove profitable. On Wednesday, Dell didn't address Fiorina's comments directly but said that his company is, in fact, a direct channel, adding, "We think that working directly with customers makes more sense." He promised more details on the printer deal early next year.

Also, Quote-of-the-Day:

''People ask me if it's permanent and if I'm dead. I tell them I'm practicing for Halloween.'' - Stan Jones, a 63-year-old Libertarian Senate candidate in Montana, who drank colloidal silver to protect him from disease. His skin's now blue, and, yes, it's permanent.

Post  43440  by  danking_70       OT: Poll: Journalists Support Iraq Invasion, Bush

Post  43441  by  Inspector_32       Reply
danking, is that the liberal media?

Is that the liberal media Republicans are always griping about?

Post  43442  by  clo       Reply
roof, "consumer strength"

Let's talk about the "Sales," Macy's has offered such sales it makes buying almost like stealing...

The only money they are making is in turning over product.

The reason I say this is their staff is sooo sparse you know they aren't hiring to take care of volume.

When I can buy 3 pair of name brand leather shoes for 45.00 when the original cost was near 180.00, and silk dresses for 15.00, what does this tell you?

Consumers are buying for pennies on the dollar...
that's my .02 ... clo

Post  43443  by  pmcw       Reply
lk, I think HLIT is in the right position to receive a windfall.

1) The Comcast deal is very close to being completed

2) The satellite mergers will either happen or not within months. Either way the companies (company) will start spending. The estimated pent up cap/ex in satellite is $3B!

3) Video on demand is ready in most set-tops and the TIVO roll out will soon start. The only thing missing is the infrastructure equipment to deliver the product. That's HLIT's market.

4) Ethernet will win in every market. We will eventually be Ethernet at least to the CO (Central Office) and most likely eventually shore to shore. The HLIT program allows for a very efficient implementation of Ethernet to the curb.

Regards, pmcw

Post  43444  by  danking_70       OT: No, it's SATIRE! Gotcha. EOM
Post  43445  by  Decomposed       ot: Inspector_32,

Post  43446  by  pmcw       Reply
clo, High end retailers are toast this year. Last weekend I took a look at the sector and I feel all of the following will probably be in for some trouble:


I remember about 20 years ago when I was actually negotiating (really getting them by just asking) better deals than even the sale prices at major department stores. I had to buy a new washer this week and Lowes and Sears were ready to play "let's make a deal" (I bought a better machine from a locally owned appliance store for less). This tells me that even the hyper-demand in durable goods has not created a seller's market. Since this is the case, higher end non-durable is probably in much more trouble.

Regards, pmcw

Post  43447  by  Decomposed       OT: Table ON TOPIC SUMMARY Oct 09, 2002
Post  43448  by  Czechsinthemail       OT:

Post  43449  by  pdowd       Reply
pmcw !!

You are sooo right about the "high end " retailers being toast.

On our vacation to Los Angeles this summer we did a lot of shopping -----one guy vs. two female teenagers plus one shopaholic wife. At the Beverly Center all the high end stores were dead . One of the busiest shops and by far my girls favorite was "Rampage" a national discount chain selling women's clothing. The girls found all sorts of bargains and even saw the star of "Buffy the Vampire Slayer" Sarah Michelle Gellar shopping there.

Rodeo Drive has become a tourist trap and trafic was really terrible. The beautiful huge Tommy Hilfiger store has closed and is boarded up. I found it odd that such a supposedly prime retail location was not being used. Neiman Marcus on Wilshire boulivard was like wise dead. Those stores are stocked so sparsely and never busy --- I always think that they are just a front for prostitution and drugs LOL.

I think even the very wealthy are tired of paying $400.00 for a Jean Paul Gaulthier tee shirt with holes in it. Later PD.

Post  43450  by  Decomposed       ot: Czechsinthemail,

Post  43451  by  pmcw       Reply
pace, INTC is such a big machine it is very difficult to value. I think Itanium will be MUCH more successful than most realize. I think INTC will continue to be one of three global leaders in fab technology. I think INTC will continue to lead the processor market. However, I don't know if INTC will provide the profits of the past.

One thing few realize is that INTC has the largest RF semi R&D effort on the planet. However, they are not providing even a small ROI.........yet. They might and if they do, it will be a killer. Finding success in this market and continuing processor dominance are the keys.

Right now, I like business models that are significantly more simple and bear lower fixed costs. I see ISIL as one of the clearest winners in semis. I rank this as being almost as obvious as LLTC was a decade plus ago (even at their currently depressed price LLTC is still a 20 bagger from then). XICO is a much longer shot, but they also only have a market cap of just over $50M. If they execute as I feel they can, they could easily ten bag in a couple of years and, again IMO, they have the ability to hit a $1B market cap by mid decade. This is why ISIL and XICO are the focus of my semi investment dollars.

Regards, pmcw

Post  43452  by  Inspector_32       OT: irrelevent scandal decomposed?
Post  43453  by  judge_dread       OT: Interesting read from george will.Is the econo
Post  43454  by  danking_70       OT: Inspector, I'll say it again.
Post  43455  by  Inspector_32       OT: decomposed...can't believe you think it's irre

Post  43456  by  Inspector_32       Reply
Danking...they didn't need a crystal ball....

Jimmy Carter just a few years earlier put them on the list of nations that sponsor terrorism. Not only do they take Iraq off that list (only to put him back on after they've armed him to the teeth).....they turn around and illegally sell weapons to Iranian muslim terrorists who had just taken our hostages a few years ealier.

Common sense (not a crystal ball) would tell you if that's a good idea or not. And if you had any doubts....Congress (our elected representatives) made it illegal to give weapons of cash for weapons to either Iraq or Iran.

But Reagan/Nush loved these little covert actions...and thought that what Congress thought didn't matter. their crewed up mid-east policy got us here and now Cheney and Rumsfeld sound to me like they want to continue on that path. I just don't trust them to handle mid-east policy anymore.

Do we need to get those weapons back now? Probably so...but starting another war there could leave us more hated in the middle east than we are today. But we may have to do it anyway...but don't do it until you've got a workable, long-term plan to bring the whole mid-east into the 21st century. Give them democracy abnd a stake in the world. Other than that, you're just creating more hatred and breeding more terrorists.

Post  43457  by  maniati       Reply
srudek: Friedman & Monetarism

Sorry for taking so long to get back to you.

You asked whether Milton Friedman was serious when he said, "There is no chance of entering into a deflationary world,' argued the venerable economist. Central banks have finally learnt that the cure for deflation is printing enough money and the cure for inflation is not printing too much money."

In responding, I'm going to try to work my way from the specific to the general.

Friedman was serious, but keep in mind that he is really talking about more than just "printing money." Technically, only currency is printed, but there are other components of the money supply that are also within the control of the Fed. So, Friedman is also saying that central banks have "learned that the cure for inflation" is increasing the amount of demand deposits, for example. He is speaking somewhat metaphorically; his real message is that inflation/deflation can be controlled through changes in the money supply. And it is those other components - not currency - that are the primary mechanism by which the money supply is expanded.

In addition, "borrowing" is not necessarily required to get additional money into the system. Look at it this way, how does anyone come to hold money? Sure, one could borrow it, but one could also exchange (sell) something for it. If the "person" on the other end of that transaction is the Fed, that results in an increase in the money supply.

Consider, for example, the nominal expansionary scenario: the Fed makes open market purchases of U.S. government securities. Let's say they buy $1M worth of bonds from John Doe. That $1M is added (electronically) to some account of Doe's. At that point, the money supply has already been expanded by $1M. So Doe came to hold that money not by borrowing it, but by selling an asset. And there are plenty of sellers of bonds on any given day.

For a while, there was some concern that monetary policy could be hampered by the retirement of government debt. Well, needless to say, given our fiscal situation, that won't be an issue for the foreseeable future. Even if it were, the Fed has proposed purchasing other asset-backed securities. Also, any time new debt is issued by the U.S. government, it could always sell that debt directly to the Fed. (That action alone does not increase the money supply, but once the government spends that money, the money supply is increased.)

So, in short, I would say there are ways for the Fed to expand the money supply when it wants to.

However, your "borrowing" argument does have merit to it, it's just not quite as extreme an issue as you might have thought. Here's what I mean: the cost of borrowing does not prevent the Fed from adding to the money supply (as I mentioned above), but the cost of borrowing does affect the money multiplier. The money multiplier determines how much the commercial banking system expands the money supply for every dollar added to the supply by the Fed. Specifically, the money multiplier will decrease as the reserve ratios of banks increase. And an increase in reserve ratios can be caused by a drop in interest rates. That is because the amount of reserves (in excess of the minimum requirement imposed by the Fed) will vary inversely with the cost of holding those reserves, and part of the cost of holding reserves is the interest that is foregone by not loaning them out.

Therefore, low interest rates can result in a low money multiplier, which reduces the final effect on the total money supply of an initial increase caused by the Fed. But low interest rates do not prevent the Fed from making that initial increase.

I think it is also important to say a word or two here about inflation and deflation. First, remember that the context here is economic aggregates, so inflation and deflation are referring to price levels of goods and services produced in the economy. They do not refer to the prices of prior-existing assets, such as equity shares or gold.

Second, prices of goods and services produced in the economy are a lot stickier on the way down than they are on the way up; therefore, deflation is a slower process than inflation.

Third, you always have to distinguish between demand-pull inflation and cost-push inflation. Demand-pull means that too much demand for too few goods is bidding up price. Cost-push means that the producer has incurred higher costs in his factors of production, and is passing those costs on in the form of higher prices. Demand-pull inflation is “easier” to fix, if you will. It is demand-pull inflation that is more amenable to monetary and fiscal policies. But cost-push inflation is a much tougher nut to crack. It’s tougher to reduce it without causing a recession in the process. In fact, mistakenly thinking that cost-push is really demand-pull, and trying to cure demand-pull when what you really have is cost-push, is a recipe for disaster. An obvious type of cost-push inflation is what I would call “exogenous” inflation, such as an oil price increase. If that’s the source of the inflation, then neither monetary nor fiscal policy will be much help. At that point, I guess I don’t see much alternative but to put your faith in Hayek and Julian Simon and pray.

Ok, I think that addresses your specific questions, so let's move on to more general issues about "monetarism." You asked whether monetarism deserved to be tossed on the scrap heap of bad ideas, and you asked whether or not Friedman sounded stupid. Obviously, your concern and motivation had to do with the specific concerns discussed above, but I think there are some more general issues that also need to be taken into account.

First, Friedman has made many important contributions to economics. There really are too many to mention, and I know I couldn't do them justice. But, let me give you just one example. The Phillips Curve represents the trade-off between inflation and unemployment. If you plot the unemployment rate on the x-axis and inflation on the y-axis, a single curve represents all the combinations of unemployment and inflation rates that are possible for a given level of output (GDP) - in theory. This was considered an important addition to the Keynesian model, as policy-makers attempted to manipulate either the level of unemployment or the amount of inflation. But, Friedman pointed out that that kind of analysis was deficient because it was too static; the Phillips Curve moves over time. Friedman contended that the curve rotated around the point where it intersected the x-axis - that point representing the "natural rate of unemployment." Consequently, he argued, the movement of the curve creates, essentially, negative feedback. As a result, you might boost employment temporarily, but, in the long run, you won't be able to improve on the natural rate of unemployment through "Keynesian" policies alone. That is a pretty widely-held belief today. Anyway, that's just one example.

Don't think I'm putting the guy on a pedestal; I think I have demonstrated that I will take issue with anyone if I think they are wrong. But, at the same time, I think it's pretty safe to say that, whether or not one agrees with Friedman on any particular issue, he is, indeed, a damn bright guy. But, again, the point I have made over and over in several different contexts is that an argument should stand or fall on its merits, since even a genius can be wrong occasionally. It was also Friedman who suggested the "program for monetary stability," which advocated setting the reserve ratio to 100%; that idea obviously didn't go anywhere.

As for "monetarism," well, that's a complicated topic. Don't let anyone try to give you a one-word or one-sentence or one-paragraph assessment. I don't think I could even define it in one paragraph, let alone give an assessment. I don't know that monetarism was ever a single, monolithic idea, and certainly its constituent ideas have evolved over time. I would urge you not to get lost in what appear to be convenient labels, because they are not really convenient; they will cause more confusion than they will clarity. Instead, examine the landscape of individual ideas with a critical and analytical eye, and see what makes sense to you.

If you look around, you are guaranteed to find the saying, "monetarism is dead." That is definitely not the case. Granted, certain "monetarist" ideas were discredited in the 1980's and into the 90's, so it is common to hear people say that monetarism reached its peak in the 1970's. But, you really have to look at all the individual ideas. Then you will get a better picture as to what has been abandoned and what has been embraced - though perhaps with a different name.

The common thread to monetarism is a focus on the money supply. But, there have been lots of points of view about the money supply over the decades that have been called monetarist. 1. One point of view is that monetary policy is more important than fiscal policy in attempting to make economic corrections. 2. Another point of view is that only monetary policy is important, and fiscal policy is irrelevant. 3. Another point of view is that the money supply (and growth of the money supply) is the only thing that matters, because the velocity of money is constant. 4. Another point of view is that, in the long run, even monetary policy does not work, and that all monetary policy does is fix problems temporarily by creating new ones in the future, so don't even bother.

The economic landscape is clearly more complicated than simply a dichotomy between that which is monetary and that which is fiscal. In addition, there are differing opinions as to how effective any policy can be in affecting the economy in a pre-determined way for the long term. There are disagreements as to whether business cycles are natural and inevitable, or natural but not inevitable, or engineered. (I suspect that the book you mentioned gets into this, but I haven't gotten a copy yet.) IMO, there's more fatalism to monetarism than there was to keynesianism. However, today's neo-keynesians seem to have adopted at least some degree of fatalism.

One episode in our history is worth noting, regarding #3 above. You can view GDP in terms of its components, which gives you GDP = C + I + G + (X-M); or you can view GDP as the product of the money supply and the velocity of money, which gives you GDP = M*V. Well, for a while the velocity had been relatively stable, and some monetarists contended that it would remain stable even during periods of inflation. The implication was that all one needed to do to grow the economy at a constant rate was to grow the money supply at a constant rate. So, in the latter part of the 70's, the Fed adopted as its policy that it would target the money supply, and grow it at a pre-determined rate. Previously it had focused more on interest rates. (Note that, for a given level of output, you cannot "set" both the interest rate and the money supply; you can set either one, but not both.) England also decided to do the same thing. You might recall a period when the size of the money supply was reported in the news on a regular basis, just as Fed discount rate changes are reported today.

Well, things didn't exactly work out as hoped. The experience demonstrated, first, that it was difficult for the Fed to target the money supply by its own (open market) actions, because reserve ratios did fluctuate, causing the money multiplier to fluctuate, as discussed above. Second, it turned out that the velocity of money was not constant, therefore, the money supply was not the deterministic lever for GDP that was once thought.

That, IMO, is typically what people mean when they say "monetarism is dead."

However, that was just one idea. In actuality, a lot of "monetarist" thinking would have predicted what happened. Monetarism is not the simple idea that GDP can be determined solely by controlling the money supply. That particular idea can, indeed, be tossed on the scrap heap. If one wants to define "monetarism" to be that idea, then the result is as you would suggest. But, I have to seriously question whether than it is an accurate definition of "monetarist" thinking. You see the difficulty with labels here? There were "monetarists" of the Chicago school who knew very well that interest rates affect the reserve ratio and, hence, the money multiplier, and who understood that velocity was not constant, and consequently, that merely attempting to target the money supply and doing nothing else would not work. They would have said that proper policy would attempt to stabilize velocity; they did not assume that it was inherently stable.

Anyway, a lot of ideas once attributed to "monetarists" are with us today. The idea that monetary policy is more effective than fiscal policy is monetarist. Monetary policy can be implemented faster than fiscal policy (duh!), and the GDP multiplier (also known simply as "the multiplier, and which indicates how much extra output you get for a $1 increase in demand) seems to have shrunk from what it was once thought to be, while the money multiplier has grown. On this score, you might want to look into "IS-LM" analysis. That attempts to determine supply-demand equilibrium simultaneously in both the goods/services markets and in the assets markets (money vs. non-money). Whether monetary or fiscal policy is more effective in a situation depends at least in part on the slopes of the IS and LM curves.

Then there's the issue as to how that policy should be used - the broader philosophy and context. The idea that monetary policy should be an on-going attempt to "stabilize" fluctuations around a natural trend line, rather than attempt to make ad-hoc corrections is monetarist. Someone might say that's neo-keynesian, but that shows you what the problem is with labels. I'm not saying it's not neo-keynesian, but it's also monetarist. And it was monetarists who first talked about the “natural rate of unemployment.”

Like I say, the important thing is understanding. The labels rank a distant second. I don’t claim to be able to put a definitive “school-of-thought” label on any particular economic idea. Look at all the ideas, analyze them, mull them over, see how they work in the real world, then decide for yourself.


Post  43458  by  jbennett53       Reply
OT, Inspector, You are arguing with someone who thinks there is nothing wrong with dumping 11 million gallons of Dioxin on a little country and who thinks that US foreign policy changes. Here is a link of interest with regards to that subject.

Post  43459  by  danking_70       OT: JBennett
Post  43460  by  srudek       ot maniati: thx for monetarism post. Quite a bit

Post  43461  by  jbennett53       Reply
OT, danking, We knew, just like a contractor who cuts corners building a bridge knows that folks down the road might pay a serious price for actions taken today. We just didn't care, like the contractor.

Post  43462  by  danking_70       OT: JB your comparison is still wrong. EOM.

Post  43463  by  jbennett53       Reply
OT, danking, What difference does it make whether I am wrong or not? The tragic results of an action the US government took are the same. Every day that goes by more information surfaces about the horror of what we did. I had a good friend, marine 2 tours in 'Nam I watched his body litterally rot. The best thing about him was when he got back from serving his country he was approached by a narc and entrapped into selling the narc 2 joints. his punishment? 3 years in Oklahoma State Prison. Some welcome home, huh? We shot down an Iranian passenger plane in 1988 and said "Oh, We're sorry it was an accident" What were doing there in the first place? We were saving Saddam from the Iranians. They would hjave killed him if we had stayed out. What awful consequences will come from the actions being considered right now? We keep meddling in the affairs of others and it always seem to come back and bite us in the ass. I'm tired of it.

Post  43464  by  pacemakernj       Reply
Linda, there is no easy way out. Gold stocks are being sold big time again. At this point I am totally confused. But then again that's what BEAR markets due to you. You're right what a mess! That said I am hanging my hat on hoping the Republicans win both houses. If the Dems win we get 2 more year's of nothing. What a thought. Aside from today's action in which I bought some INTC. Don't ask me why just seemed like a good trading opportunity. Good Luck. Pace.

Post  43465  by  pacemakernj       OT: Supreme, I like that summation. Pace.

Post  43466  by  Warstud       Reply
FCC rejects DISH/GMH merger : Dow Jones reports that the FCC has rejected the DISH/GMH merger; agency technically sent the matter for review by an FCC administrative law judge, but FCC insiders believe it's unlikely a judge would overturn the commission's decision in the complex case.

Post  43467  by  clo       Reply
Decomp, S, a friend sent this to me. Looks as if I should have waited on them also. ;( clo

14:33 ET Sears, Roebuck sued by New Jersey over alleged fraud at auto ctrs (S) 27.71 -0.74: New Jersey is suing S for running auto repair centers throughout the state that allegedly cheated hundreds of customers.

Post  43468  by  pacemakernj       Reply
PMCW, thanks for your insights. It is great having someone with your depth of knowledge in that area. Regards, Pace.

Post  43469  by  lkorrow       Reply
Tin, glad to see you are on an even keel and decided to stay on Table. Best wishes, Linda

Post  43470  by  Decomposed       ot: Inspector_32
Post  43471  by  lkorrow       OT: Maniati, can't agree with you more on, ".

Post  43472  by  jeffbas       Reply
Interesting article:

(Hint: Substitute a share of stock you own in a company for "coffee mug".)

Post  43473  by  maniati       OT: srudek: You are most welcome. BTW, the writing

Post  43474  by  pmcw       Reply
jeff, That is indeed an interesting story. I read about it over a dozen years ago (could be the same guy - let's hope so for the sake of the integrity of the prize). In this previous case study they went on to develop situations to increase and decrease the perceived value of the cups to illustrate emotional attachment and craving for one lacks. Regards, pmcw

Post  43475  by  danking_70       OT: Maniati re: Genius
Post  43476  by  clo       OT: For those of you that have been following my i
Post  43477  by  danking_70       OT: Looks like Oprah supports military action vs S

Post  43478  by  supreme-apg       Reply
Hey Czech~, I appreciated re-reading what might become confusing under broad interpretation.
Fortunately, the '.' at the end of the first sentence and the fact that it was a reply will ultimately save me. To be certain, I should have written "They [Irag]..." and there would be no question. Sorry, and thanks.
As to Grenada, well the real success there was that it was done before anybody heard about the problem or issue. Since then, it has been a media dog-and-pony show.
Thanks again,

Post  43479  by  danking_70       OT: JB: What's the difference...
Post  43480  by  danking_70       OT: Kuwaiti imam may have aided gunmen
Post  43481  by  danking_70       OT: PA: Still calling for Israel's destruction
Post  43482  by  ferociousD       Russian Oil Heads to America
Post  43483  by  maniati       OT: Dan: True enough. I'm glad there was something
Post  43484  by  pacemakernj       OT: Dan, you know for the life of me I cannot figu

Post  43485  by  pmcw       Reply
maniati, Excellent post - thank you!! I don't know if you've ever taken the time to read the following, but you (others will likely take a quick trip to snooze city) might find it interesting:

The 2000 report discusses the Phillips Curve in chapter two.

Regards, pmcw

Post  43486  by  pmcw       Reply
Good for HLIT / bad for America

Merge or not, they are hungry to spend. The real competition for satellite is cable and, if they get their act together, telecom.

FCC DECLINES TO APPROVE ECHOSTAR-DIRECTV MERGER. News Release. (Dkt No 01-348). News Media Contact: Michelle Russo at (202) 418-2358 and David Fiske at (202) 418-0513 MB. Contact Barbara Esbin and Marcia Glauberman at (202) 418-7200

Regards, pmcw

Post  43487  by  maldinero       OT: So, Pace, when are you shipping out?

Post  43488  by  jbennett53       Reply
maniati, I have a question for you. Do you know what New Jersey state law says about senatorial races if Toracelli had waited one week? Looks to me that the GOP got the best deal they could hope for given the situation. It also appears that the current handling is legit under state law. Since no one likes my links ya'll can just look for whaty I found. Good luck and by the way I am not hoping for the gains I expect the Dems will have soon. Toodles.