February 16, 2005
Alan Greenspan Is Not a Happy Camper
It is, he says, imperative to have an administration whose budget policy is not a clown show:
FT.com / World / US - Greenspan warns on US fiscal discipline: Greenspan said it was ‘imperative to restore fiscal discipline’ in the United States to help narrow its huge current account deficit. He also said the country had to act before 2008 to prepare its finances for a coming wave of retiring ‘baby boomers’ and said if it failed to do so, there could be an adverse impact on bond markets...
And, he says, he doesn't understand why long bond rates are so low anymore than the rest of us do:
The Fed chief said it was hard to explain why long-term interest rates have declined in the face of the U.S. central bank’s short-term rate increases. He noted, however, that yields and risk spreads ‘have narrowed globally’ -- not just in the United States. ‘For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum,’ Greenspan said. ‘Bond price movements may be a short-term aberration, but it will be some time before we are able to better judge the forces underlying recent experience.’...
Posted by DeLong at February 16, 2005 09:51 AM