Bears Acting Like Spoiled Brats

I’m not sure who needs the
rate cut worse,
Abby Joseph Cohen or the stock market. Unfortunately for the
bulls, neither the infamous Goldman Sachs strategist, nor the stock market are
likely to react positively to the Fed’s meeting and interest rate move
tomorrow. Why? Because the market, while hoping beyond hope for a 75-basis-point
reduction, will likely get what would normally be an extremely bullish 50-basis-point cut.

By painting himself into a corner in his testimony before Congress a few weeks
ago, Mr. Greenspan kept the bears in the driver’s seat by denying the market a
richly deserved interest rate cut. Instead of helping restore a whiff of
consumer confidence, the Fed chairman described what he was going to give us,
told us how much we’d enjoy playing with our new toy, but kept it from us. The
market reacted like a spoiled child and I don’t see tomorrow’s "gift"
changing the attitude of this bearish brat.

I’ve probably spent as much time as anyone slamming Mr. Greenspan for taking
too long to do what the market was demanding. Now everyone is jumping on the
bandwagon, taking polls to see what percentage of the populous thinks we should
fire the Maestro. While I can take some solace in feeling justified for my
assessment of the dire economic situation months ago, I have to say that some of
the recent criticism of Mr. Greenspan is unjustified. People forget that Mr.
Greenspan came on as Fed Chair in August of 1987, just two months before the
crash. He was at the helm for that ensuing 19-month bear market, as well as the
relatively short six-month recovery after the bear emerged from its cave back in

Up until three months ago, it would be
hard to imagine a person with a higher approval rating than our beloved Fed
Chairman, but as they said in the David Mamet film by the same title, Things
. Now they’re calling for Mr. Greenspan’s head. People are even
calling the slowdown a recession. Morgan Stanley economist Stephen Roach stated,
“This is the first recession of the Information Age and the first modern-day
contraction in an era of globalization; as a result, both the speed and
cross-border implications of cyclical adjustments are in uncharted territory.

we are indeed in a recession, or whether Mr. Greenspan’s better days are
behind him, we’ve got to play the cards that are dealt us. I don’t spend
much time with games of chance, since I get my fill of risk taking on a daily
basis at the world’s best casino. However, if I were a betting man, I would
say tomorrow’s move will have an impact, but not nearly what the bulls hoped
it would. Better late than never just doesn’t apply to Fed policy.