Alan Greenspan has frightened away the specter of economic "bubbles." He spoke and the economy must obey.
According to Reuters, the former Fed head said "he does not expect another "bubble" in world markets for a long time, and that central banks at any rate do not control the long-term interest rates that can be related to bubbles."
The statement, along with others about housing and the recession, are likely to help him sell his new book.
Greenspan’s point, which may have the benefit of being true, is that central banks cannot always stop sharp increases in market prices simply by raising rates.
For all he knows, he theory is being proved correct as he speaks.
Douglas A. McIntyre
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