Greenspan Plays Better Grinch Than Jim Carey

By declaring they are increasingly concerned about the slowing economy, the
Federal governors indicated they are prepared to cut interest rates if needed
to head off a possible recession. POSSIBLE RECESSION. What economy are they
looking at? The bluest of the blue chip stocks are trading at 52-week lows,
virtually every dot-com is dot-dead and the Fed thinks the economy is slowing!
Maybe that’s why Wall Street’s reaction was so negative, as the DJIA, once
up 140 points finished down 61, while the Nasdaq lost another 113 points to a
new low.

Sure the market wanted to hear the phrase “shifting to neutral," as that
indicates the Fed sees more risk of a recession than of an inflationary
spiral, but the Fed’s cautious approach is what has Wall Street nervous. You
can afford to be cautious when you think inflation is right at your doorstep.
But being cautious when the market’s in the tank and you’ve got the
double whammy of a colder than usual winter and the highest energy prices in
anyone’s memory is like seeing a drowning man and telling him you’ll be
back with help in a month.

The upshot, if there is such a thing, is that Alan Greenspan was generous
enough to indicate the Fed is willing to reduce rates, albeit in the future.
Given the market’s tumult, I doubt the Fed will be able to wait until the
next scheduled meeting in January to give us that quarter-point rate cut.