Word: greenspans
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...Even for Greenspan, whose sense of the pulse of the economy is legendary, the current financial environment has to be a source of concern, if not confusion. Although a key index of leading economic indicators fell in March, unemployment claims also dropped, by the biggest number in more than three years. The core index of consumer prices suffered its largest jump in nearly three years, yet the wages of most workers are not keeping pace...
...conflicting signals all come at a time when the U.S. is depending more than ever on foreign money to sustain growth. For Greenspan and his colleagues at the Fed, which has been gradually raising interest rates over the past year, the quandary is whether to quicken the pace or take a break. "You don't know exactly when to stop," says economist Mark Zandi of Economy.com "If history is any guide, they...
...long ago, of course, Greenspan was the one trusted oracle who Wall Street and Washington believed could steer through such choppy waters. After taking over from inflation slayer Paul Volcker in 1987, Greenspan greatly expanded the role and influence of the Fed Chairman, whose principal job is to oversee monetary policy. His economic mission creep included commenting on everything from tax cuts and the housing market to entitlement programs. In 1996 he warned investors of "irrational exuberance," only to turn around and exacerbate the stock market bubble, his critics allege, by becoming a cheerleader for the New Economy. Many...
...gloves are already off. Senator Hillary Clinton chastised Greenspan at a Senate hearing when he tried to square his support for the 2001 tax cuts with his current dire warnings about the budget deficits and unsustainable entitlement programs. "If confronted with the same evidence we had back then, I would recommend exactly what I recommended then," he said, referring to the rosy budget-surplus projections at the time. "It turns out we were all wrong...
Considering that many economists never believe such long-range forecasts, Greenspan's defense left many observers shaking their heads. His argument that he supported tax cuts only in general--not the Bush tax cuts--has also tarnished his credibility. "What the U.S. needs is a truly politically independent central banker," says Morgan Stanley chief economist Stephen Roach. "When Greenspan expresses his opinions on nonmonetary policy issues, whether he wants to admit it or not, he becomes identified as an advocate and it influences the decision making...