Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession by Frederick Sheehan

Author:Frederick Sheehan [Sheehan, Frederick]
Language: eng
Format: epub, pdf
ISBN: 9780071615426
Publisher: McGraw-Hill

17

“This Is Insane!!”

June–December 1999

I’m not saying [security analyst] forecasts are any good as far as earnings projections are concerned. Indeed, they’re awful. They are biased on the upside, as they are made by people who are getting paid largely to project rising earnings in order to sell stocks, which is the business of the people who employ them.1

—Federal Reserve Chairman Alan Greenspan, October 5, 1999, FOMC meeting

The chairman had not told the public or Congress about the Federal Reserve’s bubble trouble. His contention of Federal Reserve impotence still snoozed at the FOMC conference table. Until Chairman Greenspan took his central bank vision public (i.e., we can’t see a crash before the carcass has fallen off a cliff ), this academic constraint brayed through Ivy League common rooms. As for Wall Street, this was to be a gift from God, the god who hypothesized in the Eccles Building.

June 17, 1999, was the day that Greenspan disclosed his doctrine to Congress: “The 1990s have witnessed one of the great bull stock markets in American history. Whether that means an unstable bubble has developed in its wake is difficult to assess. A large number of analysts have judged the level of equity prices to be excessive, even taking into account

1 FOMC meeting transcript, October 5, 1999, p. 48.

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