But with a few uncharacteristically transparent words, has Greenspan boxed himself in? "If he doesn't cut rates now, he'll crush this rally," says Money writer Pablo Galarza. "With corporate profits headed for a bad third quarter, the fundamentals don't support this enthusiasm. The prospect of rate cuts are the only thing fueling this." Of course, the markets listen to Greenspan, not the other way around, and Galarza says that when the time comes, the Fed chairman will crunch the numbers and do precisely as he pleases. In other words, the Fed may indeed decide to cut rates, but it may not do it at this month's meeting.
Pop Goes the Dow
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NEW YORK: Irrational exuberance is back, and this time it's Alan Greenspan's fault. The Dow staged its largest point gain ever -- 380.53 points -- to clear 8,000 as stocks roared out of the gate Tuesday and kept going, primed for a rally by Greenspan's suggestion Friday that the Fed was as likely to cut short-term interest rates as raise them. Guess which possibility investors are suddenly betting on. Rate cuts would not only stimulate the U.S. economy at home, but would weaken the dollar and thus make Asian countries' massive dollar debts easier to bear -- all prospects that have traders salivating.