Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (2249)	3/16/2004 9:04:32 PM
From: mishedlo	Respond to of 116555

Greenspan on Greenspan on Bubbles prudentbear.com At the September 24, 1996 Federal Open Market Committee meeting Fed Chairman Alan Greenspan stated “I recognize that there is a stock market bubble problem at this point... it is not obvious to me that there is a simple set of monetary policy solutions that deflate the bubble. We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it. My concern is that I am not sure what else it will do.” In a January 3, 2004 speech Chairman Greenspan stated “There appears to be enough evidence, at least tentatively, to conclude that our strategy of addressing the bubble's consequences rather than the bubble itself has been successful.” From an Associated Press release January 3, 2004 we learn Mr. Greenspan, in answering questions after the speech, downplayed the potential risk of a new stock price bubble emerging now that the economy is getting stronger. “My own sense is that we don't have to worry too much about the emergence of real bubbles again for a while because I think it takes a number of years for the trauma of the collapse to wear off,” Greenspan said. What prompted Mr. Greenspan to recognize a stock market bubble in 1996? Based on his 1996 criteria to diagnose a bubble, has the “bubble problem” receded or has the bubble actually become worse? Buried on page 5 of an obscure Federal Reserve Board publication are two sentences that provide the definitive answer. Here Mr. Greenspan clearly defined the bubble that was present in 1996. As of today the “bubble problem” he defined has not gone away.