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ALAN OAKES publisher aioakes@aol.com

- Welcome aboard, Mr. B

I have had no hesitation on writing on a couple of occasions about Alan Greenspan (you know, the one rvho talked about anything and everything). so I am interested to see where his successor, Ben Bernanke, the new Fed chairman, goes over the next few months. As you know, his role is critical in determining the economic future of our country. The chairman determines the level of interest rates by lowering interest rates to stimulate the economy or increasing them rvhen inflation is deemed too high. Interest rates impact all levels of our economy, so this might be a good time to take a breather for a few months and set a new course.

It would seem rhat old A.G. had only one agenda for the year prior to his retirement, and that was to increase interest rates-pretty much monthly, because he spied inflation rearing its ugly head. When he started his monthly purge, the economy seemed headed in only one direction: up. Despite all he has done. I think the economy in general has been quite amazingly stubborn and resilient till norv. throrvine off all that hits it.

For all the fears A.G. threrv out this last year as to why rates had to go up every time he gulped to take a breath. none of his fears seems to have come true. The housing bubble did not implode (although the housing market is definitely cooling). bonds did not soar. the core inflation level did not rise. the dollar did not collapse (actually it has improved). consumers are still out there buying and the economy has not slorved dotvn. Horvever. I am concerned that rve are getting close to that point ifcurrent policies continue.

While the reality is that rve have had 15 or 16 quarters of double digit growth in corporate eamings and lorv unemployment. this has still not tri-sgered high inflation so rvhy the rush to keep putting interest rates up? There comes a point rvhere you start to tread water and then sink. and it can happen very quickly.

My concem comes partly from listening to business contacts, rvho are relatively happy rvith their prospects in the first half of the year. but are more pessimistic about the second half.

When you consider that the events that A.G. srveated over didn't happen last year. there is a good chance they rvill not happen this year either. But from many years of looking at rvhat people and companies do as rates go up. I think we are at the junction of going backrvards. I knorv that if rve as a small business are looking very carefully at future capital expansion at rates of around 8Vc to 9Vc rvith implied further increases to come. much larger companies must be doing the same.

Welcome nervs is that the stock market has started the year rvell. If history repeats itself. the rally rve are currently seeing rvill end up the year rvith an average gain of more than 107r. This follorvs last year's debacle rvhere most of us sarv little gain. In fact. the U.S. stock market return was near the bottom of the international league table of grorvth in 32 top countries. The Standard & Poor 500 return rvas less that 3%. The Dorv Jones Industrial Average was even rvorse. For those of us still smarting rvith our losses in 2001. rve still need a good couple ofyears to try to catch back up again.

Now to the good nervs. I hope. While A.G. took rrvo days to say in long complex sentence structures rvhat most might say in trvo hours. I am hoping that Mr B. just might be a linte easier to understand. Judging from his first report he rvill perform rvith a lot more brevity and clarity. Horvever, rvhile the press expects him to follorv the same line as A.G.. my hope is that he might see it is time to give interestrate increases a rest. Time out already!

Mr. B. by all means keep monitoring the cost of housing and horv consumers are reacting: I do understand your concerns about inflation. But as I look around the rvorld. rvith the turmoil of the Mid East and the business explosion in China. ive must compete. -erorv and invest. Continuing to increase interest rates will only stifle the economy and choke investment.

While I understand your job is a delicate balance. the rvriting may be on the rvall that this economy cannot take much more. Please don't kill the golden -eoose.

And. A.G.. enjoy your $8.5 mitlion book advance. I knorv you rvill have a lot to say.