predict nor protect us from the OPEC-led 200% rise in oil prices, nor could he magically create new electricity sources in California. The US economy is feeling the pain of a stock market that has let America down. The economy is feeling the pain of a decade of capital spending, a higher and higher portion of which was made using debt. Until that debt load goes down, banks will not open up the taps and loan again. And until added spending hits the economy, the service on that debt will grow more painful. That leaves the tax cut as the next event to prime the spending pump. Just like interest rates, however, it's not like a tax cut has an immediate effect. Most peoples' paychecks would grow by a few bucks a week, hardly afford an extra pack of cigarettes. It will help – but slowly.The Fed did not have much choice in raising rates last year; the credit quality of the biggest lending institutions was deteriorating too fast. And now the Greenspan is caught in the worse situation. He can lower rates, but the banks aren't willing to take the same risks they did before and there is an absence of really good borrowers; many companies overbuilt in the late 1990's anyway. Until inventory levels work their way through the channels and existing capacity is being utilized, borrowing levels will remain low, regardless of what Greenspan does. Until Greenspan comes up with another plan, the U.S economy is in grave danger. Even if America escapes a recession, the economy will take a deep cut to the throat. Many of us will feel it, and none can escape....
