Newspaper article The Christian Science Monitor

The Market's Toughest Critic - and White Knight

Newspaper article The Christian Science Monitor

The Market's Toughest Critic - and White Knight

Article excerpt

Call him the man who speaks in billion-dollar syllables.

As chairman of the Federal Reserve, Alan Greenspan has often moved stock markets up or down with the gentlest turn of phrase.

The Fed chairman stunned the Dow Jones Industrial Average into a 83-point decline on Oct. 8 by warning that equities in coming years are unlikely to match the past three years of rocket-like returns. He apparently hoped to reaffirm his credentials as a tough inflation fighter. Yet even the words of Mr. Greenspan - arguably the most powerful official in shaping the livelihood of Americans - can lose their sting over time. Investors shook off his warnings of "irrational exuberance" last December and drove the market still higher. Perhaps they are waiting for him to turn words into actions. The Fed has lifted interest rates just a quarter point this year, even with growth and employment beyond levels widely believed to trigger inflation. Some analysts believe Greenspan now subscribes to the notion of a New Era, in which technology and global competition fuel strong, inflation-free growth. …

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