Murray: No, in the stock market, too. The stock market, in the first week that it was open, adequately and fully discounted a moment in American history where there was more or less an instantaneous, total collapse of confidence. You can say that confidence had been depleting over the previous 18 months, and you would be right, but I still don't remember anything that so instantaneously took away confidence. I've seen confidence a lot lower, but it took longer periods of time to decline. That's what the stock market told you the first week it was open. It was so great that the monetary and fiscal authorities could do nothing but respond to it.

Simonoff: There were reports that week that department store sales were off 30%. People were just paralyzed.

Murray: Fifty percent in New York.

Simonoff: In New York, at first people had this angry strong defiant reaction. Then you started to hear all these stories about six-year-olds saying, "I don't have a mommy or a daddy anymore." It started to hit home.

Murray: Yes.

Simonoff: Is there a danger that we overreact to this?

Murray: Which way?

Simonoff: Too much in terms of fiscal and monetary stimulus.

Murray: The short answer is no. You stimulate as much as you need to stimulate, and in the long run that's probably too much. Then you have to reel it back in. This is the point where you cut the patient's chest open, you grab his heart and you bang on it. Which is something you'd never want to do unless you thought the patient was just about to die. In the first couple of weeks after September 11, the patient gave evidence of, at least psychologically, wanting to die on you.

Simonoff: In 1973-74, you were working on Wall Street. Even after this tragedy, we have a much stronger economy.

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