Greenspan Should Lean On The Banks

The last time yields on 30-year bonds were below the bank prime rate, the Federal Reserve was tightening credit to fight inflation. Today, with long bonds flirting with 53 4% and the prime at 6%, the big economic problem is lack of demand, not too much. Oil prices are falling, gold has cracked, soybeans are down, and Prime Minister Morihiro Hosokawa is talking about a possible double-dip recession for Japan. Clearly, growth is weak, and the U.S. economy needs a swift kick.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.