Greenspan's Telling It Like It Is

Enough, already, about whether Alan Greenspan should shut up.

To repeat what I said on CNBC's On the Money last night in a friendly debate with my pal, Paul Kedrosky: If Greenspan had been out there saying that all is well with the world, that the Chinese market is going up and there's little chance of a recession, nobody would be griping.

The difference this time and last, when he uttered the "r" word, is that he was willing to suggest risk without so much as a hint of his traditional Greenspeak gobbledygook.

Suddenly, a Fed chief who was so beloved by the bulls and so revered by the financial markets, is being portrayed as feeble, old and demented.

"He should shut up already," tends to be the hue-and-cry of the Cramers, Kudlows and -- oh yes -- the Kedroskys.

Now that Greenspan is advising Pimco, and to paraphrase the Kedroskys of the world: "It's purely a marketing tactic. He can't imagine not being in the spotlight." To which I say, "So what?" That's why most money managers and others go on TV!

"But he's undermining Bernanke," the newfound Greenspan critics say. Oh, please. He's not undermining anybody. Ben Bernanke's suddenly out of favor because rates haven't moved lower and the newly uncensored Greenspan, now doing business with the likes of Pimco's Bill Gross, can finally take off the blinders and see the financial world for what it really is: getting riskier by the day.

The beat goes on...

Comments

[Johnny Bitc...:]

"..can finally take off the blinders and see the financial world for what it really is: getting riskier by the day"

and which risk measure, may I inquire, are you using to measure this risk ?

The Greenberg-has-a-huncho... measure ?

This chatter misses the main point:

As Fed Chairman, Greenspan was biased based on his position of authority in U.S. monetary matters.

As PIMCO consultant, Greenspan is biased based on getting paid by PIMCO.

Should we believe, as you seem to suggest, that being on PIMCO's payroll is less corrupting than being on the Fed's payroll as Chairman ?

I don't know the answer to the question, but PIMCO sells bond strategies. To the degree that other strategies (equity or alternative investments) can be portrayed as more risky is to the degree that PIMCO may benefit.

I should believe that Greenspan is now unbiased because he works for PIMCO ?

Ridiculous.

Simply Ridiculous.

John.

2007 May 24 05:19 PM

[teleman:]

>

Ah, "...without so much as a hint of the traditional gobeledygook" is the clue. When AG had really important things to say he felt obligated to speak in his own code, Greenspanspeak. Today if he spoke that way no one would give him so much as a sccond's worth of attention . Thus, in order to gain the attention for which he so badly craves, he satates his empty predictions in the clearest way possible.

2007 May 24 06:32 PM

[Sonia Mirza:]

"traditional Greenspeak gobbledygook"?

Is this what it takes to "make it" (part of which includes getting your glutes chewed on CNBC by the fast money crew)...?

"purely a marketing tactic" --> everything is - wake up. Noone would offer free advice that would result in free profit. Noone would show your face on TV if they didnt believe it would bring in an audience. And who decides what makes the news in our fine newspapers?

Re: "To which I say, "So what?" That's why most money managers and others go on TV!""

Including yourself? You just discredited your own contribution above in saying that.

And by the way, Greenspan knew that the effectiveness of Monetary policy is contingent on whether that change is akin to an economic shock - unpredictable - or expected. If we knew rates were going up before the FOMC mtg, it would already have taken place/be priced - as such, rendering mpol ineffective. That unpredictable nature - how it should be - is what made him THE Greenspan.

2007 May 24 07:08 PM

[NeilEzell:]

Enough of Greenspan! He's in the private sector now but still riding on his larels as Fed-Chief. Bernanke is well qualified and doing a good job. Every time Greenspan speaks, unfortunately he's still heard as the Fed Chairman, not an employee of Pimco. Mr. Greenspan, with all due respect please let Mr. Bernanke do his job and good luck at Pimco.

2007 May 25 11:24 AM

[John Gaats:]

The problem with Greenspan remark is that it depresses more on Chinese ADRs than Chinese stocks in Shanghai. Overvalue is more of a problem in Shanghai. However, Chinese ADRs exchanged here is the real casuality.

2007 May 25 03:59 PM