More support for the asset-based economy status quo from Sir Alan Greenspan

With stocks now up significantly from March 2009 lows, a mild correction has been underway for the past two weeks.  Even if it risks becoming a major correction, we will still be well above levels just 6 months ago.  But that has Alan Greenspan worried.

Business Week reports:

Former Federal Reserve Chairman Alan Greenspan said a U.S. economic recovery is “going to be a slow, trudging thing,” and that he “would get very concerned” if stock prices continue to fall.

A drop in stock prices is “more than a warning sign,” Greenspan said yesterday on NBC’s “Meet the Press” program. “It’s important to remember that equity values, stock prices, are not just paper profits. They actually have a profoundly important impact on economic activity.”

Keep that stock market up or the assets underpinning bank balance sheets and the fake recovery will fall in value. That is bad news for you recovery fans.

Sir Alan has spoken.

13 Comments
  1. VangelV says

    How is what he is saying materially different than what is being said by those pushing ‘stimulus’ projects to keep the fake economy going?

    Does this mean that you are coming around to the argument that we have to get government out of the way and let the markets clean out the system so that a real recovery can finally begin?

  2. Vangel says

    How is what he is saying materially different than what is being said by those pushing ‘stimulus’ projects to keep the fake economy going?

    And does this mean that you are coming around to the argument that we have to get government out of the way and let the markets clean out the system so that a real recovery can finally begin?

    1. Edward Harrison says

      Greenspan is not saying anything ‘materially’ different. He just focuses on different agents of re-creating the status quo ante.

      1. Vangel says

        I agree. But the way I read you, you are aware that what Greenspan is proposing is to keep the ‘fake economy’ going. If you can see that what Greenspan is proposing is futile why are you pushing that Obama do the same thing by using stimulus activities to fund uneconomic projects that do not create permanent jobs and allow a real recovery to take place?

        From what I can tell, your criticism of Greenspan is inconsistent with your position on government spending and meddling in the economy.

        1. Edward Harrison says

          I have shifted from the stimulus talk to focus on malinvestment, Vangel: http://bit.ly/8Qpjqs

Comments are closed.

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