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Et tu, Alan Greenspan?
Alan Greenspan, March 17, 2008:
“We will never be able to anticipate all discontinuities in financial markets.”
Alan Greenspan, April 6, 2008:
"I have been surprised by the fierceness of investors in retrenching from risk since August [2007]."
Bill Gross, as reported by Bloomberg:
During a 30-minute discussion on banks several months before the global credit crisis, Greenspan's ``brilliance in terms of forecasting the potential for exactly what happened was a big money saver for us,'' Gross said yesterday at a conference organized by the Asia Society in Los Angeles. ``He's made and saved billions of dollars for Pimco already.''
For those that don't know, PIMCO is an asset management company and Greenspan has, since he left the Fed, been a consultant to the firm.
But the point here is that since the credit crisis broke, Greenspan has played a number of exculpatory cards - his favorite one being that the Fed could do nothing about the housing bubble especially, either by following different monetary or regulatory policies. What Bill Gross seems to say however, is that when Greenspan was paid to advise PIMCO on the impacts of a credit crunch, he was remarkably prescient.
Just saying.
Comments (2)
Interesting that PIMCO started getting out of mortgage backed securities in 2006 and 2007 and their large institutional fund is 88% cash. The May investor letter from Gross has him still unsure the credit mess is over. Didn't Greenspan recently say the worst is over?
May 21, 2008 8:42 AM | Reply | Permalink
The bbg article linked to here suggested Gross has piled into mortgages this year.
I think Gross's prognosis is that liquidity will remain tight for the foreseeable future, but clearly he also believes that the return on stuff like MBS is pretty exceptional. However, my favorite commentary on "where we are" vis a vis the credit crisis is from Myron Scholes who said he couldn't decide if the storm had passed or we were in the eye of a hurricane. And of course, no-one knows for sure.
But apparently Alan Greenspan is a person worth paying for his advice.
May 21, 2008 8:54 AM | Reply | Permalink
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