Bush has been more open to having more of a bipartisan board than I've seen before. I didn't even give a moment's thought that Clinton would reappoint me.
No one should interpret the remarks as being a prelude for the Federal Reserve raising the Fed funds rate at the December or February meeting. That's not going to happen. If that was going to happen, the chairman wouldn't have made a speech to puncture the exuberance.
Alan Greenspan tends to give a tougher talk in a speech when he is not going to raise rates than he does when he is going to raise rates. He either barks or he bites, and I think he is barking.
Chairman Greenspan's comments went further than previous Fed commentary on recognizing the degree of slowing in the economy and clearly pave the way for the Fed to switch to a neutral directive. Moreover, his comments further encourage us in our belief that the Fed will lower rates in the first quarter of next year.
This [confidence report] increases the likelihood [rates] will be moved down another [half percentage point] to 2.5 percent. That's going to increase the likelihood of an improvement in economic conditions next year.
The markets are saying (a rate hike) is not only justified, but it's good news. It remains to be seen whether the economy will be stronger than we anticipate.
It reduces the rate of return on that $6.5 trillion hiding in money-market accounts. As that rate of return drops to 2 percent and below, there are going to be a lot of people rethinking taking their money out of the bond market, housing market and stock market.
