Greenspan's Kiss & Tell

Monday, September 17, 2007

Easy Al will keep 'em forecasts coming. Former Federal Reserve chairman Alan Greenspan will continue to rattle markets with his economic predictions. His successor Ben Bernanke won't be delighted to hear Greenspan repeatedly defending his public comments on the economy, interest rates and whatever else the former Fedhead elects worthy his suddenly very clear speech.
Otherwise today's interview on CBS (which was cut short by my cable provider in favor of elegant and silent killer whales after two thirds) informed us that Greenspan prefers, ahem, "interesting" orange wallpaper and reads - surprise surprise - economic stuff at breakfast. Rumours he negotiates a 10-page photo-strip with "Beautiful Homes" have not been confirmed yet. He still wears no logo polo shirts so sponsoring for the right sum should be no problem.
Relaxed to the max Mr. Greenspan's economic services firm is prepared to bring paying clients such economic wisdom as there will be severe 2-digit declines in house prices. Draw no wrong conclusions though. Greenspan argues in his book due on Monday that this is not the catastrophic result of his low interest rate policy in the Fed but that house prices are somehow connected to former communist workers in Europe becoming capitalists. Great, many of them have a mortgage now too. If that was meant by freedom?
On TV he stubbornly defended his position to keep his loudspeaker on. His predecessor at the Fed, Paul Volcker has been adhering to a "no comment" standard on rate issues since he retired.
Greenspan promised he will be different and is seemingly oblivious to the fact that he captained the period of the fastest and deepest rate cuts in history.
In his book he will tell us that the Fed could not regulate the banks who lowered loan standards close to Ninjas (no income no job or assets.)
Has he lost it? The Fed is by law the banking supervisory body and it was also during his tenure that the Glass-Stegall act was repealed.
Mr. Greenspan has had his weaknesses in forecasting economic events. We now know he sees a recession coming. Retire in peace.


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