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News Letter Reviews Does Anyone Else Miss Alan Greenspan?
News Letter Reviews Does Anyone Else Miss Alan Greenspan? 
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| Does Anyone Else Miss Alan Greenspan? |
| Monday, 17 December 2007 | ||||||||
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Dear Reader, Call me crazy, but I am starting to miss Alan Greenspan. For 19 years, Mr. Greenspan led the Federal Reserve through some of the most tumultuous times of the past 50 years. There was the 1987 crash, the Internet bubble, and of course the attacks of September 11. Through all of these events, Mr. Greenspan led the Fed with a certain calm and calculated demeanor. Perhaps it was his nature or perhaps because he was in office for so long, but the actions of the Fed under Alan Greenspan were relatively predictable. So far in the two years that Ben Bernanke has been commanding the ship, the Fed has not been as predictable as it was under Mr. Greenspan. This past week we saw two examples of how the market has yet to adjust to the thinking of the Fed under Mr. Bernanke. On Tuesday, as you all know, the Fed cut the fed funds rate by 25 basis points and did the same to the discount rate. The comments about the economy, and inflation in particular, spooked the market. The Dow went from being up 50 points to being down 300 points in a matter of a few hours. Wednesday brought another surprise from the Fed, as they announced a plan that includes working with other central banks to soften the global credit crisis. This announcement sent the Dow up some 270 points just after the open on Wednesday, but the rally failed. may be remembering the past more fondly than it actually was, but it seems the Fed was much more calculating and predictable under Mr. Greenspan. Sure, he made market-shaking comments in 19 years at the helm (remember “irrational exuberance?”), but it seems they were fewer than Mr. Bernanke has had in his first two years. Greenspan speaks in such a confusing manner that he often left Wall Street wondering what he actually meant. Nevertheless, I would rather have a confused market than an uncertain one.
Ben Bernanke is almost the direct opposite of Greenspan when it comes to addressing the economy. He is very direct and blunt. Now don’t get me wrong, I appreciate directness. But there are times when you have to couch your comments to soften the blow. Investors are like children to a degree. You want to be firm with them, but you also have to be nurturing. There is a fine line between encouragement and pushing too hard. As Mr. Bernanke enters his third year as Fed Chairman, let’s hope that he learns to be a little less direct. Or let’s hope that Wall Street learns to read him better. Either way, having a better feel for what the Fed is doing would certainly serve the market well. Worry is good for the market; uncertainty isn’t. Good luck and good trading, Rick P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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