February 6, 2005

AT LEAST CHAIRMAN GREENSPAN IS ALIVE:

Fed ‘more of a threat than bin Laden’ (Ian Fraser, 2/06/05, Sunday Herald)

ALAN Greenspan’s Federal Reserve is a “bigger threat to the US economy than Osama bin Laden”, according to a leading Scottish investor.

The astonishing claim comes from Robin Angus, director of the £150 million Personal Assets Trust and adviser to Edinburgh University’s Centre for Financial Markets Research. Angus accuses the Fed chairman of pumping too much liquidity into the US economy.

He said: “Greenspan’s interest rate policy has suspended reality and driven all asset prices into bubble territory. There are plenty of pins on hand to prick the bubble. A rise of only 1% in the required real rate of return on financial instruments would cause a fall in equity markets of over 30%.”


He's obviously right that the Fed is the greatest threat to our economy, his analysis is just backwards: real interest rates are too high, not too low.

Posted by Orrin Judd at February 6, 2005 9:22 AM
Comments

And EU policy is positively benign.

Always has been.

I do not agree there is a housing bubble over the entire US.

Parts, yes, and prices are dropping in my area, and I'm in DuPage County, IL.

Posted by: Sandy P at February 6, 2005 11:37 AM

House prices go up, house prices go down. That's life. If interest rates go up, house prices will drop.

Running a 150 million pound fund makes you a major figure in Scotland? That doesn't even get you on CNBC at 4AM here in the States.

Why should 'real rates of return' go up significantly at any time in the future? They never have for a prolonged period, why should they start now?

Posted by: Bart at February 6, 2005 11:59 AM
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