The World Smiles With Greenspan

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WASHINGTON: Alan Greenspan got a worldwide round of applause Thursday for his appearance on Capitol Hill Wednesday. Indexes in Japan, Hong Kong and South Korea -- economies where a rate cut would provide badly needed breathing room on foreign currency debts -- all followed the Dow's Wednesday lead with hefty spikes of their own. U.S. markets then settled into a leisurely sell-off Thursday, with traders apparently shelving some of those buy orders until after next week's policy meeting.

"It was Greenspan's backdoor way of telling us that there will be a drop in rates sooner rather than later," says TIME business reporter Bernard Baumohl. "He's convinced that deflation is as big a problem for the U.S. as inflation, and that means he can lower rates in order to ease the currency strain on Asia and Latin America." So now the secret's out about Tuesday's FOMC meeting -- maybe. The Fed can still stand pat, and if it does, all those Greenspan-induced gains could go right out the window.