So long, suckers! You won't have Alan Greenspan to kick around anymore.
The end of the Federal Reserve's interest-cutting campaign this week will go down as one of the last hurrahs for the 75-year-old Fed chief, who's 14-year reign began and ended with market collapses but in between saw one of the greatest bull markets in history.
Wrongly blamed for causing the latest recession, Greenspan's profile in Washington D.C. has been shrinking steadily for most of the last year, even as he battled the worsening economy with 11 aggressive rate cuts in 12 months.
Wall Street effectively stopped paying attention to the rate cuts after the emergency reduction following the Sept. 11 attacks, convinced that they were having little or no effect on stimulating the economy. And in Washington, the focus has shifted to the Enron debacle, which officially became a circus this week when it was reported that the Rev. Al Sharpton and Johnnie Cochran plan to get involved (if the money's gone, it must be Enron).
The Fed did leave the door open for another rate cut, but just a crack. Truth is, the 11 cuts in 2001, bringing rates to their lowest levels in 40 years, are finally starting to have their desired effect. The economy is turning around and will come back a lot faster this year than most people expect. The next rate move will be up, though it won't come for several months. See rate cut story.
So having helped the economy turn that final corner, Greenspan now finds himself with little to do. His advice on handling the budding financial/accounting crisis surrounding Enron (ENRNQ: news, chart, profile) is not being sought by either Congress or the Securities and Exchange Commission, which is a shame given that the crisis could lead to enormous changes in how Wall Street works.
And the economic stimulus package debate has deteriorated into a political farce, going well beyond the point where Greenspan or anyone could help with any reasoned economic analysis.
So my guess is that sometime this year, the man who coined the term "irrational exuberance" will make a rationally exuberant decision to take his briefcase and go home.
My only hope is that he doesn't resign at a time when the markets are particularly vulnerable, like now. Despite the fury vented at Greenspan from investors big and small over the last several months, the news of his resignation will cause a serious crisis of confidence on Wall Street when it does happen.
Greenspan may have been vilified for raising rates a few times too many at the end of 2000. But he will also be remembered for steering the financial system through the 1987 stock market crash, the 1994 Mexican currency crisis, the 1995 collapse of British bank Barings Plc, and the 1998 Russian debt and Asian currency crisis.
As you can see, these things tend to erupt a lot. Over the last 14 years, Wall Street has taken comfort in the fact that Greenspan could always be counted on to prevent a crisis from becoming a systemic failure. That comfort will go away with him, and it could be rough going for a while as we break in the new guy, or gal.
So when Greenspan does resign, all we know for sure is that it will take Wall Street by surprise, and that it won't be happy. By then, however, the economy should be on sounder footing, and the market should be well on the way to sowing the seeds for the next scandal.
And then Alan Greenspan, the most well known person in the financial universe, will be free to jump back into the private sector. Where he can really cause some trouble.
(Quelle: cbs.marketwatch.com)
So long,
Calexa
The end of the Federal Reserve's interest-cutting campaign this week will go down as one of the last hurrahs for the 75-year-old Fed chief, who's 14-year reign began and ended with market collapses but in between saw one of the greatest bull markets in history.
Wrongly blamed for causing the latest recession, Greenspan's profile in Washington D.C. has been shrinking steadily for most of the last year, even as he battled the worsening economy with 11 aggressive rate cuts in 12 months.
Wall Street effectively stopped paying attention to the rate cuts after the emergency reduction following the Sept. 11 attacks, convinced that they were having little or no effect on stimulating the economy. And in Washington, the focus has shifted to the Enron debacle, which officially became a circus this week when it was reported that the Rev. Al Sharpton and Johnnie Cochran plan to get involved (if the money's gone, it must be Enron).
The Fed did leave the door open for another rate cut, but just a crack. Truth is, the 11 cuts in 2001, bringing rates to their lowest levels in 40 years, are finally starting to have their desired effect. The economy is turning around and will come back a lot faster this year than most people expect. The next rate move will be up, though it won't come for several months. See rate cut story.
So having helped the economy turn that final corner, Greenspan now finds himself with little to do. His advice on handling the budding financial/accounting crisis surrounding Enron (ENRNQ: news, chart, profile) is not being sought by either Congress or the Securities and Exchange Commission, which is a shame given that the crisis could lead to enormous changes in how Wall Street works.
And the economic stimulus package debate has deteriorated into a political farce, going well beyond the point where Greenspan or anyone could help with any reasoned economic analysis.
So my guess is that sometime this year, the man who coined the term "irrational exuberance" will make a rationally exuberant decision to take his briefcase and go home.
My only hope is that he doesn't resign at a time when the markets are particularly vulnerable, like now. Despite the fury vented at Greenspan from investors big and small over the last several months, the news of his resignation will cause a serious crisis of confidence on Wall Street when it does happen.
Greenspan may have been vilified for raising rates a few times too many at the end of 2000. But he will also be remembered for steering the financial system through the 1987 stock market crash, the 1994 Mexican currency crisis, the 1995 collapse of British bank Barings Plc, and the 1998 Russian debt and Asian currency crisis.
As you can see, these things tend to erupt a lot. Over the last 14 years, Wall Street has taken comfort in the fact that Greenspan could always be counted on to prevent a crisis from becoming a systemic failure. That comfort will go away with him, and it could be rough going for a while as we break in the new guy, or gal.
So when Greenspan does resign, all we know for sure is that it will take Wall Street by surprise, and that it won't be happy. By then, however, the economy should be on sounder footing, and the market should be well on the way to sowing the seeds for the next scandal.
And then Alan Greenspan, the most well known person in the financial universe, will be free to jump back into the private sector. Where he can really cause some trouble.
(Quelle: cbs.marketwatch.com)
So long,
Calexa
