"But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade."
--Alan Greenspan December 5, 1996
"Is it possible that there is something fundamentally new about this current period that would warrant...complacency? Yes, it is possible… But, regrettably, history is strewn with visions of such ‘new eras’ that, in the end, have proven to be a mirage. In short, history counsels caution."
"History demonstrates that participants in financial markets are susceptible to waves of optimism. Excessive optimism sows the seeds of its own reversal in the form of imbalances that tend to grow over time. When the unwarranted expectations ultimately are not realized, the unwinding of these financial excesses can act to amplify a downturn."
--Alan Greenspan, February, 1997
"A driver might tap the brakes to make sure not to be hit by a truck coming down the street, even if he thinks the chances of such an event are relatively low. The costs of being wrong are simply too high. Similarly, in conducting monetary policy the Federal Reserve needs constantly to look down the road to gauge the future risks to the economy and act accordingly."
--Alan Greenspan July 22, 1997
"Nonetheless, the still open question is whether productivity growth is in the process of picking up. For it is the answer to this question that is material to the current debate between those who argue that the economy is entering a "new era" of greatly enhanced sustainable growth and unusually high levels of resource utilization, and those who do not."
--Alan Greenspan September 5, 1997
"Forecasts of inflation and growth in real activity for the United States, including those of the Federal Open Market Committee, have been generally off for several years. Inflation has been chronically overpredicted and real gross domestic product growth underpredicted."
"This is the best economy I've ever seen in 50 years of studying it every day,"
--Alan Greenspan May 1998
"Something special has happened in the American economy in recent years...a remarkable run of economic growth that appears to have its roots in ongoing advances in technology."
--Alan Greenspan June 1999
"Inflation, as measured by the four-quarter percent change in the consumer price index, is expected to be 2-1/4 to 2-1/2 percent over the four quarters of this year. CPI increases thus far in 1999 have been greater than the average in 1998, but the governors and bank presidents do not anticipate a further pickup in inflation going forward. An abatement of the recent run-up in energy prices would contribute to such a pattern, but policymakers' forecasts also reflect their determination to hold the line on inflation, through policy actions if necessary. The central tendency of their CPI inflation forecasts for 2000 is 2 to 2-1/2 percent."
--Alan Greenspan before the Committee on Banking and Financial Services, U.S. House of Representatives July 22, 1999
"Obviously our exchange rate is firm and rising and that is not the type of thing one would ordinarily envisage in the context of inflationary pressures...As best we can judge at the moment there is very little in the way of emerging short-term inflation expectations,"
--Alan Greenspan June 4, 2001
"I think the fundamentals of the economy are strong...I believe the momentum of our expansion should continue for some time...I don't see the end of this expansion in sight."
--Lawrence Summers, US Treasury Secretary, Wednesday, December 15, 1999
"The fundamentals of the American economy continue to be strong. I believe the momentum of the expansion is very much in place."
--Lawrence Summers, US Treasury Secretary, Wednesday, Saturday, April 15, 2000
"The current slowdown is unlike any other in the last fifty years."
--Lawrence Summers former Secretary of the Treasury March 2001
"Stocks have reached what looks like a permanently high plateau."
--Yale University economics professor Irving Fisher in 1929
"The end of the decline of the Stock Market will...probably not be long, only a few more days at most."
--Irving Fisher, quoted in the Brooklyn Eagle, November 14, 1929
"For five years at least, American business has been in the grip of an apocalyptic, holy-rolling exaltation over the unparalleled prosperity of the 'new era'..."
--Business Week, Sept. 7, 1929
"The market is following natural laws of economics and there is no reason why both prosperity and the market should not continue for years at this high level or even higher."
--Thomas Shotwell, "Wall Street Analysis," 1929 World Almanac
"The worst has passed."
--Joint statement by representatives of 35 of the largest wire houses on Wall Street at the close of trading, October 24, 1929
"Financial storm definitely passed."'
--Bernard Baruch, cablegram to Winston Churchill, November 15, 1929
"This crash is not going to have much effect on business."'
--Arthur Reynolds (Chairman of Continental Illinois Bank of Chicago), October 24, 1929
"Believing that fundamental conditions of the country are sound...my son and I have been purchasing sound common stocks."
--John D. Rockefeller, Wednesday, October 30, 1929
"The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin."
--Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929
"Hysteria has now disappeared from Wall Street."
--The Times of London, November 2, 1929
"[The Wall Street Crash] doesn't mean that there will be any general or serious business depression..For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game...Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
--Business Week, November 2, 1929
"[1930 will be] a splendid employment year."
--U.S. Dept. of Labor, New Year's Forecast, December 1929
"The business vista disclosed as the curtain rises on the new year beckons to a forward sweep of industry toward prosperous horizons...Signs all point to the fact that this nation which has entered an era of vast industrial expansion will continue its forward sweep for many years to come."
--Samuel P. Arnot (President of the Chicago Board of Trade), January 1, 1930
"I see nothing in the present situation that is either menacing or warrants pessimism...I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
--Andrew William Mellon, (U.S. Secretary of the Treasury), December 31, 1929
"While the crash only took place six months ago, I am convinced we have now passed through the worst and with continued unity of effort we shall rapidly recover...There has been no significant bank or industrial failure. That danger, too, is safely behind us."
--Herbert Hoover, May 1, 1930
"Gentleman, you have come sixty days too late. The depression is over."
--Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
"I don't know anything about any depression."
--J.P. Morgan Jr. (American banker and financier), c. 1931 |
