Courtesy of Mish.
Alan Greenspan, one of the biggest contrary indicators in the history of finance says Stocks Are ‘Relatively Low’ and Headed Upward
“In a sense, we are actually at relatively low stock prices,” Greenspan, who guided the central bank for more than 18 years, said in an interview with Sara Eisen on Bloomberg Television today. “So-called equity premiums are still at a very high level, and that means that the momentum of the market is still ultimately up.”
Greenspan said the stock market is “just barely above 2007” and the average annual increase in stock prices “throughout the postwar period” is 7 percent, which leaves room for a rise.
“Price-earnings ratios are not hugely up,” he said. The market has “gone up a huge amount, but it’s not bubbly,” according to Greenspan.
Clueless Magoo
Bloomberg writer Daniel Akst discusses Greenspan’s credibility in Greenspan’s ‘Map’ Is Clueless Trip Through Bubble Land
If Alan Greenspan were Santa Claus, what’s the last thing you’d want for Christmas?
Given his track record, a guide to economic forecasting would have to be the worst present he could bring.
Yet that’s exactly what the former Federal Reserve Board chief delivers in his clueless new book, “The Map and the Territory.” A guide to economic forecasting by Greenspan is about as credible as art history by Mr. Magoo.
Let’s review. As Fed chairman until 2006, practically the eve of the financial crisis, Greenspan couldn’t see the storm on the horizon.
Despite his mastery of the techniques described at somewhat numbing length in his book, he failed to draw any useful conclusions from a host of indicators that were pointing to trouble.
Historic Failure
“The Map and the Territory” pretends to tackle the subject of forecasting while saying next to nothing about the author’s historic failure to reduce the risks leading to the crisis, which he calls “almost universally unanticipated.”
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