Word: greenspans
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Dates: during 2000-2009
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Market bubbles are not obvious when they are occurring. Even former U.S. Federal Reserve Chairman Alan Greenspan says he's unable to tell for sure when exuberance becomes irrational. While being questioned before Congress a couple of years ago about the 2000 tech-stock meltdown, Greenspan famously said: "As events evolved, we recognized that, despite our suspicions, it was very difficult to definitively identify a bubble until after the fact - that is, when its bursting confirmed its existence...
...cost Chinese production helped to maintain unusually stable prices for manufactured goods around the world is coming to an end. This view isn't held just by a few lonely bears in the wilderness. In his new book and in recent newspaper interviews, former U.S. central-bank chairman Alan Greenspan has been emphasizing that prices for Chinese exports have started to rise, which will contribute to a revival of global inflation. Ben Simpfendorfer, China strategist for the Royal Bank of Scotland, puts it succinctly: "Where China was a deflationary influence over the last 10 years, it will be an inflationary...
Consider what happened five days into the Bush presidency in 2001 when the spending-averse Greenspan told a Senate committee that government surpluses were getting so huge, a tax cut was probably a good idea. Given the state of knowledge at the time, this wasn't an unreasonable argument--and when the surpluses became deficits, Greenspan changed his tune. But Democratic critics said his words provided cover for the President and Congress to squander the fruits of a decade of fiscal responsibility in months. While this exaggerates Greenspan's influence, it isn't entirely wrong, and Greenspan admits as much...
Another such problematic comment came in 2004, when he pointed out that many borrowers could save money by taking out adjustable-rate mortgages (ARMS). Many borrowers did save money with ARMs, and the idea that a few words from Greenspan at a credit-union meeting persuaded millions of others to take out teaser-rate loans they couldn't afford stretches belief. But with ARM-related defaults on the rise, it doesn't look good...
...Greenspan successor Ben Bernanke has learned from this and doesn't talk about anything but monetary policy in public. The rest of us, meanwhile, may want to work on weaning ourselves off the infantile belief that everything that happens in our economy, good or bad, is the doing of the Fed chairman...