Well, no. He didn’t really say that.
But given his history as a serial bubble blower here — and his superlative track record as a forecastor — he might as well have said that anyway.
But his comments were enough to tank the thinly traded, pre-holiday markets in the US, taking them from nicely up for the day to flat to down.
The bigger question is this: Why does anyone still pay attention to the former Fed Chair? His forecasting acumen has proven to be awful, and his influence of Federal Reserve policy is now gone. Is this merely a cult of personality? I don’t get it.
Former U.S. Federal Reserve Chairman Alan Greenspan warned Wednesday that there’s going to be a "dramatic contraction" in Chinese equities and that the current surge on the Chinese stock market is unsustainable, according to media reports. In recent weeks, a number of financial firms, including Goldman Sachs, as well as Governor Zhou Xiaochuan of the People’s Bank of China have expressed concern about the possibility of a bubble forming in the Chinese stock market. The Shanghai Composite Index, which tracks shares listed on the larger of China’s two stock exchanges, has gained 56% year-to-date.
Is there anyone who doesn’t think the Chinese markets are bubblicious?
The bigger questions are whether or not Chinese policymakers have lost control of the economy. Or, as Nouriel Roubini asks, are they unwilling to use the tools they have?
Maybe not. Our rich invest there. Must be smart money, right????
(Besides, average Americans are keeping our economy going w/out money from the rich. Average American capitalists don’t need wages, they’re in the investing class with their leveraged gov’t backed, mortgage debt money)
It’s a perfect system!!!!
Since most investors know what a doof Greenspan is and hence expect Chinese stocks to soar, naturally, we should expect a correction. Become a contrarian to the contrarians, or something like that.
Nah, Greenspan might finally get one right…Even a blind squirrel finds a nut every once in a while.
You have to believe that China’s Leadership are unwilling to be perceived as “out of control” of their country. These comments from Greenspan are clearly Bernanke’s indirect mouthpiece — and likely to spur a response by Chinese authorities. Have to believe they’re not going to let it continue . . . they’ll probably be heavy-handed and bring the bubble to an abrupt end.
How do you say, “buy on the dip” in Chinese?
Greenspan needs to stfu. This guy has created more economic destruction than anyone in the history of mankind.
I can’t wait till that old fart takes his long awaited dirt nap.
His sole goal is to keep the baby boomer generation working 10 years longer than they should so that the US stays competitive with the rest of the world. Due to our demographics, he knows we need the 55 – 65 year olds to keep chugging along at their desk job. Ruining the working classes 401(k)’s has become his specialty.
As my friend Jamie says, “Long before Greenspan was a genius, he was an idiot…”
“The bigger question is this: Why does anyone still pay attention to the former Fed Chair?”
I totally agree. He no longer has the Fed research staff at his fingertips feeding him so now is it just him.
“Maybe not. Our rich invest there. Must be smart money, right????”
John also has it right. Do you see our US Corporate citizens investing in the US? No, China. Good enough for them, good enough for me.
China imports more from Japan than the US does. The US is the problem. not China. China is trading with the world and the US exports our jobs to the rest of the world. I think the US is in the unsustainable position.
“me”: China isn’t “trading with” the world, it’s “selling to” the world
“skateman”: the blind squirrel may find a nut, but what about the blind nut who is…the Former Chairman?
He couldn’t figure out our stock market after being in charge of the economy for a hundred years, so why would he have ANY cred whatsoever with regards to predictions about China’s stock market?
Jim Cramer saying:
“The worst that happens with my intraday buys is simple: You watch the stock go up without enough of a position on!
Horrors!”
Now that’s cocky.
“How do you say, “buy on the dip” in Chinese?”
If only I could predict when that dip will occur. =/
Did Volcker do to Greenspan what Greenspan is doing to Bernanke? You know, undermine him by shooting his mouth off?
see marc faber’s recent bloomberg interview…
its a bubble, but the consensus is that its a bubble…bubble’s tend to have a pretty steep and tenacious final phase…
The problem with foreign bubbles is that they compete for oxygen with domestic ones. Thus, by pricking any or all foreign bubbles, one can potentially, though by no means certainly, prolong our own delightful little bubbles. That’s what Greenscam, in his usual role as the economic consigliori for the Bush mob, is attempting to do.
I’m thinking in line with JDog.
Presented population stats seem somewhat balanced. But this hyped baby boomer retirement has me wondering, and its steady cash out to party on. Myself, I’m in the final 1/3 to cash out.
Are the XYZer’s playing in this game or are they on another page. Like why save / programs get stolen or are mismanaged for someone elses benefit. So party with whats in my pocket like my parents. Living aint living if you aint living.
LOL, I think Greenspan is just toying with folks at this point.
Greg0658: I suppose I’m GenX (1980), and I’m not touching this EM volatility. I’m in the tech industry and I’m heavily long on semiconductors and WiMAX, but my retirement funds are dedicated to value-contrarians and merger funds.
The merger funds will do well so long as liquidity stays high (monkey+dartboard), and the value funds will see some growth as the bubble’s parabolic rise creates choppiness in darling growth stocks like AAPL and GOOG. I’d keep cash or bonds if not for the M3 expansion.
“Is there anyone who doesn’t think the Chinese markets are bubblicious?”
More on the money is, Is there anyone who doesn’t think the U S markets bubblicious?
Best regards,
Econolicious
Ouch, J-dog. You might be right.
Ouch, J-dog. You might be right.
Greenspan is a joke. Remember his famous “irrational exuberance” comment he made back in 1996. The market didn’t flinch until 1998. So I would think his comments may not crash this bullish market now. I srongly think Chinese will do everything to keep this market momentum stable until the Olympics game. Sure there might be some minor bumps along the road. But I expect Dow to be in 14000 by year end.
When the Chinese bubble pops, will the rest of the world decouple?
The February-March drop was triggered by a plunge in Shanghai and that plunge was set off by political rumors not by economics.
“Writing on the Wall” by Will Hutton explains that Chinese companies are much less independent of the government (and both its development agenda and its nepotism) than they seem.
The Chinese government is between a rock and a hard place: if they pop the bubble, they risk major social unrest, as in Albania in the 90s. If they don’t, when it finally pops itself, it could damage the entire Chinese economy and set up even broader social unrest.
central planning….?
Paulson, Wu Cool China Growth; Local Leaders Add Fuel
http://tinyurl.com/3agmuh
Mr Greenspan is the proud heir of John Law Scottish lawyer whom advised the duc d’Orleans to unlink the currency from gold .
The outcome was a financial disaster and the largest number of bankrupties throughout Europe in the 18th century.
hey look… hank paulson has called a housing bottom… tell it to the folks from sacramento…. even house auctioned by the courthouse aren’t taken at half price…
http://www.youtube.com/watch?v=dgtpxBPYnvE
you presume that greenspan was the reason the market cratered at 2:00 pm. it was going sideways for 4 hours and the pit boys pushed it out of the box to the downside. after it breaks out, everyone dog piles on the direction of the breakout or breakdown in this case
SHANGHAI (Reuters) – Alan Greenspan’s warning about a bubble in China’s stock market was met by disagreement, resentment and conspiracy theories among many Chinese investors on Thursday — suggesting the bubble may continue building.
http://www.reuters.com/article/reutersEdge/idUSSHA867320070524
The BUBBLE is in BUBBLE TALK!! EOM
Sounds a lot like Bill Gross has gotten fed up trying to talk his book for the last couple of years and has hired Greenspan to take a whack at it. The correction in China will be much larger than in the US, but ANY correction in the US markets, coupled with enough recession talk, might just get Bernanke to panic and help PIMCO make up for years of underperformance. You’re not going to take that lying down, are you Barry?
Have a clue people. The market was way overbought and needed at least a breather, and the fact that the 10/30 year treasury yields have shot up lately was the real cause for this (garden variety?) selloff. If the 10-year treasury yield would break out over the 5 handle we’d probably see a bit more bloodletting.
Greenspan was just a convenient excuse. He has to make a living now just like any other pundits, but unfortunately, in his case, he can’t win. So, as it was , he was blamed for “badmouthing” the economy and the markets. Imagine if he’d described a rosy scenario instead, and then the selloff comes. What would people say then? “You foolish old man don’t have any clue!” Either way he can’t win. Funny how quickly (and disgracefully, disrespectfully) the pundits who used to applaud and revere “the Maestro” are now telling him to “get lost” or “shut up.”
What they don’t recognize (or don’t want to) is that Greenspan is a great catalyst, but not the cause for market movements. Price always moves first, then the “news” comes to justify either a rally or a selloff. Only amateurs listen to, and believe in, TV/media pundits that shouted “markets are selling off due to Greenspan’ comment”. The smart money has started unloading some when the treasury yields were ramping up since last week. They don’t listen to Greenspan or any other TV pundits.
If you do, then you deserve to lose money, because it’s not Greenspan that affected the market. TV pundits just love to have something concrete to “explain” market’s behavior, and the former Fed Chairman was too good a convenient and popular catalyst to hang on to in order to generate news splash.
I wanted to short the China Market, but after Greenspan’s remarks, it might time to invest there.
Ditto to the people who question why we listen to a has-been. I don’t trust him after his comments about the Bush tax cuts causing a decrease in federal revenues. Wrong!!! I think he listens to his wife too much.