- The Big Picture - http://www.ritholtz.com/blog -

Greenspan’s New Forecast

Posted By Barry Ritholtz On March 2, 2005 @ 12:20 pm In Economy,Markets | Comments Disabled

Spencer England reminds us of the Fed Chief’s forecasting history:

The market is rallying on Alan Greenspan’s comments, revealing that traders have inordinately short memories. Four years ago, Greenspan chatted up the structural federal surplus; recall that it was going to drive the deficit to zero.

He actually talked about the problems of the Social Security trust fund having to buy private debt because of a lack of government debt. This bullish forecast was used to justify the Bush tax cuts.
Otherwise, bond traders would have nothing to trade, creating massive unemployment. Now he is using a very bearish forecast to argue for benefit cuts.

But which forecast is correct? It sure doesn’t look like his forecast of March 2, 2001 [1] was correct. Why should anyone believe Greenspan now? His forecasting track record is horrific.

See Jim Rogers’ book Adventure Capitalist [2]. It is even harsher in its criticism of the "Maestro." (See pages 357-59)

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2005/03/greenspans-new-forecast/

URLs in this post:

[1] forecast of March 2, 2001: http://www.federalreserve.gov/boarddocs/testimony/2001/20010302/default.htm

[2] Adventure Capitalist: http://www.amazon.com/exec/obidos/ASIN/0375509127/thebigpictu09-20

Copyright © 2008 The Big Picture. All rights reserved.