Alan Greenspan seems to be longing for his own Daily Show. Every day the maestro seeks to orchestrate a different tune, each day becomes more discordant than the other. Over the weekend he told ABC News This Week that more cash should be dumped into the financial system. Then yesterday he tells the Wall Street Journal that he was referring to aid “similar to what government does in natural disasters.” (I guess he was too busy writing his book to pay attention to the efficient monetary operation at FEMA.) Despite claiming his opaqueness was purposefully engineered only for his time as Fed chairman, he tells the Journal that he doesn’t want intervention to stop falling home prices, but wants “to do it strictly with cash. Do it out in the open. Do it cleanly and with transparency, not by hidden processes.” That’s where the Journal reporting on Greenspan ends. He’s not asked who, what, when, where, why. My comment to all the media outlets quoting Greenspan is why bother.
Not to be outdone by Greenspan, former Clinton treasury secretary Lawrence Summers feels compelled to mouth off. Summers tells the Journal that “only 40% of the Fed funds rate reduction has passed through to the broader Libor. To correct that, the Fed should pull its monetary policy levers to the extent necessary to reduce Libor to its desired level.” This is what he’s teaching at Harvard, that the Fed’s power extends to controlling other central banks?! Summers is also a part-time managing director of D.E. Shaw, a St. investment and PE firm. “People at D.E. Shaw are aware of my views. Their investment strategies are not driven by macroeconomic-policy considerations.” For their investors’ sakes, let’s hope not.
Wall Street Journal: “Ex-Treasury Secretary Calls for Tax Cut, Spending Plan” (Once again you must be a print or online subscriber to access. The article contains Greenspan’s comments.)