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Sourcing the Greenspan Chatter

Posted By Barry Ritholtz On February 8, 2006 @ 5:54 pm In Federal Reserve,Inflation,Investing | Comments Disabled

This is the article that the Greenspan quote came from that popped the market today; I don’t know how accurate it is (holographic image?) but

Gold price riding high on fear of terrorism, says Greenspan [1]
Leo Lewis, Tokyo
February 09, 2006
http://tinyurl.com/98gdp

Excerpt:

"ALAN Greenspan, who stepped
down last week as chairman of the US Federal Reserve after 18 1/2 years, has
blamed the threat of terrorism for the high gold price, in his first private
sector speech since being let off the leash of officialdom.

According to
members of his audience of international investors – watching a holographic
image in Tokyo as he spoke in New York – Greenspan said the high cost of gold
did not reflect inflation or the strength of commodities, but rather a fear
among investors of a major geopolitical conflict. There were people who believed
that a nuclear weapon could be detonated within five years, the former American
central bank supremo said.

The low probability of such an event occurring would not necessarily avert a
spike in the gold price, he added.

Greenspan went on to discuss a range of topics, including the problems
created by a lack of investment in refining capacity by the oil industry. He
said this failure by the oil majors meant that the era of cheap energy was
almost surely over.

The former Fed chairman is also said to have indulged in a moment of
self-criticism over the central bank’s failure to prevent the market bubble in
the late 1990s.

That may explain Gold’s $20 whackage yesterday, but what about all the rest of the metals and commodities?

Also, if you missed this, you MUST read it:

GREENSPAN SENDS MIXED SIGNALS IN FIRST DAY AT HOME [2]
Former Fed Chief’s Inscrutable Statements Baffle Wife
http://www.borowitzreport.com/archive_rpt.asp?rec=1307&srch=

Its a hoot!

and on the chance the article disappears, I’ll archive it after the jump . . .

Gold price riding high on fear
of terrorism, says Greenspan

Leo Lewis, Tokyo
09feb06
http://www.theaustralian.news.com.au/common/story_page/0,5744,18084883%255E643,00.html

ALAN Greenspan, who stepped down last week as chairman of the US Federal
Reserve after 18 1/2 years, has blamed the threat of terrorism for the high gold
price, in his first private sector speech since being let off the leash of
officialdom.

According to members of his audience of international
investors – watching a holographic image in Tokyo as he spoke in New York -
Greenspan said the high cost of gold did not reflect inflation or the strength
of commodities, but rather a fear among investors of a major geopolitical
conflict. There were people who believed that a nuclear weapon could be
detonated within five years, the former American central bank supremo said.

The low probability of such an event occurring would not necessarily avert a
spike in the gold price, he added.

Greenspan went on to discuss a range of topics, including the problems
created by a lack of investment in refining capacity by the oil industry. He
said this failure by the oil majors meant that the era of cheap energy was
almost surely over.

The former Fed chairman is also said to have indulged in a moment of
self-criticism over the central bank’s failure to prevent the market bubble in
the late 1990s.

He admitted that at the time he and his colleagues could not see that the
notion that they could deflate a bubble with incremental rises in rates was an
illusion.

Greenspan’s decision to appear in public so soon after stepping down from the
Fed clearly demonstrates that the revered figure in central banking is not one
to revel in retirement, after almost two decades at the Fed.

The 79-year-old is believed to have earned $US120,000 ($162,000) from his
one-hour speaking engagement.

Greenspan revealed that on his first day of retirement last week he told his
wife how strange it was to wake up and not worry about what had happened on the
Tokyo market the night before.

The question of where he would deliver his first public speech since
retirement had been the subject of fierce debate and intense commercial rivalry.

Wall Street investment banks, including Goldman Sachs, Morgan Stanley and
Citigroup, are understood to have offered to pay him large sums for his time,
but they were beaten by CLSA, an aggressive securities firm based in Asia which
runs an annual forum on Japan for investors.

Two years ago Bill Clinton, the former US president, gave the opening speech
at the forum – also via hologram – for which he was paid $US200,000.

From the comfort of an apartment in New York, Greenspan fielded questions
from investors and offered some cheer by declaring that after years in the
wilderness Japan was a normal economy again.

The Times


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URL to article: http://www.ritholtz.com/blog/2006/02/sourcing-the-greenspan-chatter/

URLs in this post:

[1] Gold price riding high on fear of terrorism, says Greenspan: http://www.theaustralian.news.com.au/common/story_page/0,5744,18084883%255E643,00.html

[2] GREENSPAN SENDS MIXED SIGNALS IN FIRST DAY AT HOME: http://www.ritholtz.com/blog http://www.borowitzreport.com/archive_rpt.asp?rec=1307&srch=

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