Fed up

Ancient Chinese proverb: He who crosses swords with Alan Greenspan is quick to get the point.

We all know, of course, that Confucius had absolutely nothing to say about the stock market and the increasingly complex and vital role that central bankers play in addressing issues of liquidity and monetary flows, not only as they concern domestic markets, but as they become increasingly intertwined in the derivative venues that allow and, in the end, encourage individual economies to interact within the global context.

Confucius, after all, didn't even have an IRA.

But we've just finished a week of sumptuous feasts, one of them that involved inhaling turkeys and another in which Wall Street gobbled up the last remaining bears still roaming the streets.

The stock market, last week, went back to its record-setting ways, the 30th record closing this year for the Dow Jones Industrial Average. And if you pop open the fortune cookie served up with this fast-moving feast, the pithy proverb portrayed at the portal of this piece of prose paints the whole picture.

The stock market is going up because:

you don't fight the Fed.

Depressions and recessions may still run rampant in Asia, parts of Europe may be on the verge of a recession, deflation may have engulfed oil and other commodity prices, and the euro, as Confucius would be quick to point out, could be, like, a total Titanic.

But Federal Reserve Chairman Alan Greenspan has signaled - with three interest-rate cuts - that none of that is going to skewer the US economy on his watch.

And he has a powerful ally in the economy itself, which continues to show more strength than


The current expansion is on track to become the longest in US history and US consumers continue to spend money faster than they earn it, a sure sign that happy days are here again.

And there is another element, although one perhaps routed more in "confusion" than Confucian thinking.

It's the Internet and its astounding affect on the stock market.

Check out the stock of eBay, for example. It's an Internet - e-commerce - company that auctions antiques online. You visit the site, view the pictures, make an offer. eBay acts as middleman, connecting buyers and sellers.

Does that sound like the greatest thing since the telephone to you? Me either.

But a lot of people must think it does, because they've bid the stock price from 25 in October to 234 last week.

The true giants of technology, the Microsofts and Intels, never delivered that kind of stock performance.

In fact, I don't know of any stock that has performed like eBay.

The whole Internet segment defies not just reason but imagination. Read Guy Halverson's brief story on Page 18. It typifies expert opinion that Net stocks are too high, too risky, too speculative for investors to jump in now.

But experts have been saying that since Net stocks first started to cook.

Yet Yahoo, Excite, eBay, Amazon, etc. keep going up. Because while eBay may not be the greatest thing since the telephone, the Internet probably is, maybe since electricity.

Technology revolutions generally take two decades to settle in. The personal computer, for example, invented in the 1970s and mandatory in the 1980s, failed to bring substantial improvements to business until the 1990s.

The Internet could change things more quickly, like tomorrow.

At least that's the expectation built into the price of Web stocks and, increasingly, the stock market.

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