Greenspan: The danger of falling stock prices

The Mess That Greenspan Made

The win by the Saints yesterday was something of an upset but, nonetheless, the graphic to the right that appears this morning in the “Meet the Press” section over at MSNBC is more than a little bit ironic in light of the predictions that former Fed Chairman Alan Greenspan and former Treasury Secretary Hank Paulson were making a few years back about the future of the economy and financial markets.

I haven’t cued up the Meet the Press video just yet and may wait until later in the day as a glass of wine (or two) may be needed before it is deemed safe to watch these two together, but Bloomberg carried this report of the event in which more warnings were heard from the former Fed chairman about the dangers of falling stock prices.

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.”

It’s surprising that Bloomberg writers Alan Bjerga and Vincent Del Giudice didn’t see fit to include the seemingly mandatory disclaimers that have been included in stories about the former Fed chairman in recent years, something along the lines of, “Many blame years of easy money policies by Alan Greenspan for multiple asset bubbles over the last decade…”