O.T. Clinton's attempt @ Calming markets?.. you decide

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

snip The 73-year-old Greenspan's current term expires June 20, and his reappointment brought immediate praise from Wall Street. ``If you had to pick out one single person for the economy's remarkable performance, his name is atop that list,'' said Richard Yamarone, senior economist at Argus Research Corp. in New York. ``He's responsible for this historic economic expansion.''


-- kevin (innxxs@yahoo.com), January 04, 2000


Na...Greenspan's been trying unsuccessfully to keep a lid on the market for sometime now.


-- Wave (eades1@flashcom.net), January 04, 2000.

When the History Book is written it won't be kind to Greenspan.


-- Ray (ray@totacc.com), January 04, 2000.

"He's responsible for this historic economic expansion."

Whether or not he manages to glide everything in safely or lands it like a 747 without power at 35,000 feet will determine whether that statement will be engraved on the base of his statue outside The Fed -- or used in a bill of particulars at the trial...

-- Adam Smith (stating@the.obvious), January 04, 2000.

According to CNNfn, Clinton appointed Greenspan for another term.

http://www.c nnfn.com/2000/01/04/markets/greenspan/

-- Tim (pixmo@pixelquest.com), January 04, 2000.

Here is the timely anouncement and the rest of the

post.... For Fair Use.........

.Washington, Jan. 4 (Bloomberg) -- Federal Reserve Board Chairman Alan Greenspan was nominated to a fourth term at the helm of the nation's central bank by President Bill Clinton. ``Clearly, wise leadership from the Fed has played a very large role in our economy. That is why I am pleased to announce my decision,'' Clinton said after meeting with Greenspan in the Oval Office this morning. The Senate will have to confirm the president's choice.

The 73-year-old Greenspan's current term expires June 20, and his reappointment brought immediate praise from Wall Street. ``If you had to pick out one single person for the economy's remarkable performance, his name is atop that list,'' said Richard Yamarone, senior economist at Argus Research Corp. in New York. ``He's responsible for this historic economic expansion.''

Others credit Clinton and former Treasury Secretary Robert Rubin for helping produce the first back-to-back government surpluses since the 1950s that contributed to low inflation and low interest rates.

First appointed by President Ronald Reagan, Greenspan took office on Aug. 11, 1987, two months before the Dow Jones Industrial Average posted its largest drop ever in percentage terms.

He steered the economy through that crisis and has presided over an unprecedented period of growth and low inflation. He kept markets calm and the economy rolling through the savings and loan debacle of the late-1980s, the Mexican peso collapse in 1994-95, and the global economic slowdown triggered by the 1997 Asian currency crisis.

Longest on Record

Now in its ninth year, the current U.S. economic expansion will become the longest on record in February. Analysts give much of the credit to Greenspan's steady hand. The only black mark of his term was a brief nine-month recession in 1990-1991. ``You'd have to say he's the best Fed chairman we've ever had,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York. ``It's not only the U.S., it's the world that's benefited from him at the helm. The economy wouldn't have righted itself in 1997 and 1998 without him at the helm.''

Greenspan's appointment ``probably guarantees the economy will continue to move forward at a fast clip and that policy will react quickly to keep the economic expansion on track,'' Rupkey said.

Nevertheless, stocks and bonds barely moved on the news, which some analysts interpreted as meaning a Fed interest-rate increase is even more likely now at the next policy meeting on Feb. 1 and 2.

`Playing Politics'

``This eliminates the issue of playing politics, in the way that (President) George Bush played politics with his appointment back in 1992,'' said Bear, Stearns & Co. Senior Economist John Ryding. ``They held up the announcement then, and it sort of left a feeling of political interference in managing monetary policy.'' Ryding is forecasting the Fed will raise U.S. interest rates by as much as half a percentage point in 2000.

The Dow Jones Industrial Average fell 165 points, or 1.5 percent, in late morning trading. The 30-year Treasury bond, which earlier rose almost a full point, was up 29/32 in late morning trading, pushing down its yield more than 7 basis points to 6.55 percent. ``Chairman Greenspan's renomination is not likely to result in lower interest rates for the shorter term, which is what markets are likely to respond to,'' said A.C. Moore, chief investment strategist at Dunvegan Associates in Santa Barbara, California.

Two Open Seats

There are currently two open seats on the Fed board. Carol Parry was nominated Aug. 5 to fill the expired term of Susan Phillips but the Senate Banking Committee hasn't acted on her nomination.

Clinton hasn't yet named anyone to fill the seat vacated by former Fed Vice Chairman Alice Rivlin, who resigned effective July 16. Fed governor Roger Ferguson was nominated and confirmed to be Rivlin's successor as Vice Chairman.

The chairman and vice chairman are nominated for four-year terms separately from members of the Fed's Board of Governors, although in practice they are always members of the Board. Ferguson's own term on the Board of Governors expires Jan. 31. Clinton has nominated Ferguson but the Senate has not acted on his nomination yet.

While Greenspan's reappointment was widely expected, ``there will come a time when he does leave, and the market isn't ready for that,'' said Mickey Levy, chief economist at Banc of America Securities in New York. ``He's made good judgments, he conveys so much credibility in the marketplace.''

Bipartisan Backing

Democratic Vice President Al Gore and most of the Republican presidential candidates had said they wanted to see Greenspan continue to run the central bank. ``And, by the way, I would not only reappoint Mr. Greenspan; if Mr. Greenspan should happen to die, God forbid, I would do like they did in the movie `Weekend at Bernie's.' I'd prop him up and put a pair of dark glasses on him and keep him as long as we could,'' Republican Senator John McCain of New Hampshire said during a debate in New Hampshire last month.

Greenspan's public speeches are marked by a tortured precision of language that's become known as Green-speak. ``If you understand what I was trying to say, I failed,'' he once joked to a congressional committee.

Green-speak once led to a stock plunge after a December 1996 speech when he discussed the difficulty of judging whether stock markets have become overvalued. ``How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?'' he said.

Boosting Growth

Investors interpreted the remark to mean Greenspan saw a bubble developing in U.S. stocks. Benchmark stock indexes in Europe and Asia skidded as much as 4 percent, while the Dow tumbled 2.25 percent before recovering.

The effect was short-lived, however. By the following month the Dow was higher than before he made his remarks. And by July of 1999, it had crossed 11,000.

Greenspan's 12-year tenure has been ``extremely successful,'' considering it started during ``a very difficult period,'' according to former Fed Governor Lawrence Lindsey.

Lindsey is chief economic adviser to Republican presidential candidate George W. Bush, who had also pledged to renominate the chairman -- even though his father, former President George Bush, blamed overly restrictive Fed policy for costing him the 1992 election.

After the Dow fell 508 points on Oct. 19, 1987, the Fed eased credit requirements, calming investors by ensuring obligations could be paid. To keep the economy from seizing up the central bank cut interest rates, and by early 1988 growth had resumed -- so much so the Fed was forced to begin raising rates by February.

The business cycle reversed again in July 1990, as Iraq's invasion of Kuwait sent oil prices skyrocketing and the economy into a tailspin. The Greenspan Fed cut the overnight bank lending rate 16 times, a total of 5 percentage points, to 3 percent.

That boosted borrowing and the economy began its extended climb in March, 1991.

Record Expansion

As the expansion nears record length, growth is racing along, keeping Greenspan and the Fed in a delicate spot.

Unemployment in November was 4.1 percent, a 29-year low. Convention economic theory holds that should produce inflation, as employers who are forced to pay more to attract scarce workers raise prices to compensate.

Yet in recent years Greenspan's Fed has been willing to experiment with the idea that new economic forces are at work. Technology, particularly computers, is finally beginning to have an impact on the economy, Greenspan suggested. That's helped boost productivity to well over 2 percent in recent years, double the rate of the 1970s and 1980s.

That's enabled growth to reach almost 4 percent the past three years, a third to half-again higher than the pace the Fed once believed would trigger inflation, without setting off a price spiral.

Last year inflation measured by the gross domestic product deflator fell below 1 percent, the lowest since the Eisenhower administration. It was at 1.1 percent through September of this year. Consumer prices aren't much higher. Over the past 12 months the consumer price index is up just 2.6 percent.

Tennis Player

Greenspan was born on March 6, 1926, in New York City. He graduated summa cum laude with a B.S. in economics from New York University in 1948, going to earn a masters in economics in 1950, and a Ph.D. in economics in 1977.

Before coming to the Fed, Greenspan was chairman and president of economic consulting firm Townsend-Greenspan & Co. Inc. He also served as chairman of President Ford's Council of Economic Advisers from 1974 to 1977, before chairing the National Commission on Social Security Reform from 1981 to 1983.

Prior to his government service Greenspan served as a corporate director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company.

Greenspan is a devoted tennis player and a fixture on Washington's social scene. He's a disciple of free-market novelist Ayn Rand, and for several years in his youth, a professional jazz musician. ``I played tenor saxophone, clarinet and bass clarinet. If I were a lot better I would probably be still doing that at the moment,'' Greenspan told the House Banking Committee on Feb. 11, 1999.

Greenspan is married to NBC News correspondent Andrea Mitchell.

-- kevin (innxxs@yahoo.com), January 04, 2000.

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