There ought to be a law -- Greenspan opines again

There really ought to be a law against a former Fed chair making public pronouncements on the market or the economy. This is especially that case for Alan Greenspan whose words were watched so carefully for so long and, consequently, who still has the power to shake and shape events. He did it again last night.

There really ought to be a law against a former Fed chair making public pronouncements on the market or the economy.  This is especially that case for Alan Greenspan whose words were watched so carefully for so long and, consequently, who still has the power to shake and shape events.  He did it again last night.

The weight of Greenspan's words continues to be significant.  He has much more power to turn things in one direction or another than he should.  He no longer has access to the same data or collaborative deliberations -- and he should keep his mouth shut. 

Last night in DC, he equated the current turmoil to that of 1987 and 1999, and even back to the back panic of 1907.  He called the conditions in many ways identical and fueled concerns if not panic about the state of the economy at this moment. 

He may be right, but he may also be wrong.  The uncomfortable fact is that he may be right more often than others simply because his words can precipitate actions consistent with his predictions.    He seems to exercise little restraint.  We need a law to muzzle him.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to financial literacy and bank transparency. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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Comments

  • ali

    September 08, 2007

    The man is too old to be believed. But, you are right. People still do believe him. He is dangerous.

  • mk

    September 08, 2007

    What happened to the freedom of speech? what would you say about investment analysts and the economic predictions that they make? Don't they move the markets? and are they always right?

    You don't like Greenspan because his utternaces caused the stocks to drop 2% on Friday but he seems to be right. There is definitely a problem in the credit markets. The Fed has already infused billions of dollars into the economy. They lowered the borrowing rate too. The President himself announced a White House plan to help people at risk of losing their homes. All this confirms that this is a bad time with the possibility of more bad news to come.

    Don't blame Greenspan for speaking an inconvenient truth.

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