Word: overheat
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Dates: during 1990-1999
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...critics include Federal Reserve Chairman Alan Greenspan, who warned last week that "the timing is not right" for the House measure, which calls for a 10% across-the-brackets cut in income taxes and a reduction of the 20% rate on capital gains to 15%. Translation: the proposals could overheat a strong economy and ignite inflation. Says Greenspan: "The first priority, in my judgment, should be getting the debt down...
...went from 44 points down to 74 up in less than a minute. Bond yields momentarily dipped below 6 percent for the first time in weeks. An extended rally ?- given the strong correlation between consumers and the value of their portfolios ?- could of course set off the very overheat that Greenspan is so worried about. But the indexes are short-sighted, emotional creatures, and Wednesday the emotion was relief. "The uncertainty is over, and Greenspan clearly is done raising for a while," says Baumohl. And the markets are off and running all over again ?- at least until August 24 starts...
Moved PermanentlyMoved PermanentlyFortune Investor DataHere?s the daisy chain: Fed hikes rates. Markets, relieved, take off. Consumers, watching their portfolios swell, continue to spend like drunken sailors. Fed gets nervous, and Greenspan -? if he deems that an economic overheat is imminent -? goes into rate-hike mode all over again, confronting the markets with their worst fear and sending Street walkers back to cowering under their desks. Bye-bye rally. Of course, if investors and traders see all this coming and sell on the news, they may have to make room under that desk for Uncle Alan -? a harmless rate hike...
...There's really no sign that the economy will overheat soon," says TIME business reporter Bernard Baumohl. "But Greenspan has to maintain his role as captain of the economy. If he admits that the economy is on autopilot -- which it is right now -- the Fed loses its relevance." Usually such vocal vigilance from the Fed chairman portends a hike in interest rates. But Baumohl says Greenspan still hopes that a "soft landing" -- in which the U.S. economy, dulled by Asia's recession, "sort of taps its brakes and cools off on its own" -- will allow him to do nothing...
...euphoria will not last long. The great Labour landslide of 1945 petered out into hopeless crisis within two years. Labour's massive victory of 1966 ran into terminal troubles within three months. Today the economy is beginning to overheat, and interest rates will have to rise soon. The Tory party will get to its feet, dust itself off and be transformed into a ferocious opposition by the autumn...