Alan Greenspan
Alan Greenspan
Alan Greenspanis an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. First appointed Federal Reserve chairman by President Ronald Reagan in August 1987, he was reappointed at successive four-year intervals until retiring on January 31, 2006, after the second-longest tenure in the position...
NationalityAmerican
ProfessionEconomist
Date of Birth6 March 1926
CityNew York City, NY
CountryUnited States of America
Because it is a highly leveraged operation and one which requires very sophisticated hedging of interest rate risk, it's imparting a significant potential systemic risk to the American financial system,
Concentration and other risks in holding dollar balances seem to have become a consideration at least for some investors,
fully appreciate the risk that some households may have trouble meeting monthly payments as interest rates and the macroeconomic climate change.
Policymakers will need to be on the alert for oil-driven, indeed energy-driven, risks to our expansion, ... firm.
Lower equity prices and higher financing costs should damp household and business spending, and greater uncertainty and risk aversion may also lead to more cautious spending behavior,
With regard to margin requirements, studies suggest that changes in such requirements have no appreciable and predictable effect on stock prices, ... Nonetheless, the Federal Reserve recognizes that considerable risks can be involved in the purchase of equity on margin, especially in volatile markets, and believes lenders and borrowers need to assess carefully the risks they are assuming through the use of margin.
Without the needed restrictions on the size of the GSE balance sheets, we put at risk our ability to preserve safe and sound financial markets in the United States, a key ingredient of support for housing,
It is risky, ... It's risky doing nothing. It's risky doing any other solution. ... I know no way to resolve this without risk.
I believe that the general growth in large [financial] institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically -- I should say, fully -- hedged.
Indeed, better risk management may be the only truly necessary element of success in banking.
At the risk of some oversimplification, if the skill composition of our work force meshed fully with the needs of our increasingly complex capital-stock, wage-skill differentials would be stable, and the percentage changes in wage rates would be the same for all job grades.
No matter how skillful the trading scheme, over the long haul, abnormal returns are sustained only through abnormal exposure to risk.
History has not dealt kindly with the aftermath of protracted periods of low risk premiums.
Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?