Despite sitting atop an organization with the largest concentration of financial brainpower since Alexander Hamilton sat there alone, Greenspan respectively found himself optimistic before a recession (1990); pessimistic before a great boom (1996, irrational exuberance); optimistic before another recession (2000); and pessimistic before an even-greater boom (2003). While not a bad central banker by any reasonable reckoning, Greenspan always has been an abysmal forecaster. To wit, here's a passage from the Fed meeting of June 27-28, 2000. The staff forecast prepared for this meeting continued to suggest that the economic expansion would moderate gradually from its currently elevated pace to a rate around or perhaps a little below the growth of the economy's estimated potential. Um, the economy went into a full recession only six or so months after that meeting adjourned.
The staff forecast prepared for this meeting continued to suggest that the economic expansion would moderate gradually from its currently elevated pace to a rate around or perhaps a little below the growth of the economy's estimated potential.
Um, the economy went into a full recession only six or so months after that meeting adjourned.
This inverse soothsaying must have been the better part of his job.
His best warning was
Bad loans are made in good times.
So true now. But who was paying attention before?
