Greenspan the bear

As Chairman of the Fed for 18 years, Greenspan was said to be responsible for creating for more than one asset bubble. He was bullish about on many subjects: a breakthrough in productivity in the US, sustained high growth rates of the US economy, soaring property and stock prices, the health of the financial sector. The Economist magazine held him squarely responsible for too much money sloshing around the markets when he quit.

Now, he seems to have turned bear He thinks the sub-prime market problem in the US will worsen and he also sees a recession setting in by the end of the year. That is making a whole lot of people livid, including people who went along with his bullish views. His detractors say that the markets are not taking him seriously- the same markets that hung on to his words when he was Fed Chief. A Bloomberg story in ET (March 19) has the following quote:

"Its definitely true that his influence is waning," said Hayes Miller, who helps oversee $38 billion at Baring Asset Management in Boston. "He may be over-playing his position in the world, even as an ex- Fed chief."