Greenspan Tries to Stop Panic
Today, in world markets, a cold shiver of sheer fear rippled across the surface. What was supposed to be a one hour police raid has been raging for three days in Saudi Arabia.
Wisely anticipating a serious recession Europe is forecasting the use of less oil in coming months. Based on this slender straw in the maelstrom, Maestro Greenspan said this: the recent climb in oil prices was already curbing demand for crude. Golly. So the market shot up on this Pollyanna prophecy.
Speaking before a group of U.S. petrochemical producers, Greenspan said more refining capacity was needed around the world, but that energy demand was already starting to soften, a trend that could help bring prices down. That assessment of the oil situation, investors believed, could keep the Fed from raising rates aggressively, since it appeared unlikely that inflation would accelerate due to higher prices.
Analysts, however, said that for the short-term, Greenspan's comments didn't change the fact that oil, which traded above $58 a barrel on Monday, remains near record highs, and interest rates are on the rise, gradually or not. The result was a trendless session on Wall Street that showed only a modest response to Greenspan's comments.
Well, I suppose Pollyanna Greenspan is going to wave his magic wand and keep interest rates below the rate of inflation for infinity. He is a monetarist who believes manipulating the currency will cure trade deficits, budget deficits and soaring oil prices.
This just in: US companies face corporate debt mountain. Interesting article. Many a sweet Pollyanna prognosis here, too. All is well! Debt is cheap! Lalalalala.
Do you believe Santa Claus comes down your chimney every Christmas?