Alan Greenspan issued his own verdict about the American economy earlier today when he appeared on Meet The Press with former Treasury Secretary Henry Paulson. When Meet The Press host David Gregory asked Greenspan about the country’s economic prospects in the near future, Greenspan said the recession "is essentially over."
Barring any last minute surprises, the New York Stock Exchange and the NASDAQ should react favorably to this positive signal from one of the Fed’s longest serving chairmen during the opening trading session for the week.
The question is, will the vaunted "Greenspan Effect" last longer than the next few days?
Back when I was a young stockbroker, when CNBC was in its infancy, and Maria Bartiromo, the original “Money Honey”, had just made her debut on the financial oriented cable news channel, they used to have something called “Greenspan Watch”. This TV segment attempted to discern, from the thickness of the portfolio Alan Greenspan would carry with him into the Federal Reserve meetings that took place immediately before an interest rate announcement, what kind of rate announcement we could expect later that day at 2pm.
The entire brokerage community would teeter on edge several times a year as a CNBC camera zoomed in on Greenspan crossing the street in Manhattan after lunch to get to his meeting at the Fed. As time went on, I thought this phenomenon had developed into a game of cat and mouse between us and Mr. Greenspan, since he surely knew what significance CNBC’s David Faber would place on whether the amount of papers under his arm constituted a thick sheaf or a thin sheaf.
By contrast, nobody watches Ben Bernacke cross the street these days, even though much of Bernacke’s job consists mostly of unraveling some of the very same monetary policy decisions Greenspan spent his career putting in place.
I’d like to believe Mr. Greenspan’s prediction this time, but he has been retired for awhile. I think he misses all the hullabaloo that used to accompany his market pronouncements, which is why I have decided to adopt a “wait and see” attitude about his latest efforts as a economic forecaster.