September 16, 2007
News & Opinion: Everyone Talking About Greenspan Book
The media doesn't know what an embargo is anymore. I can tell you that publishers are driven nuts when reporters start talking about a book before it comes out. With the book slated to come out Monday, Alan Greenspan's book The Age of Turbulence is the latest to fall victim to impatience.
It started with Portfolio Magazine article by John Cassidy which will appear in the October issue but showed up online earlier this week. There are vague references to the material in the book and is more of a critic of Greenspan's tenure as Federal Reserve Chairman.
The Wall Street was skipped the indirect route and featured the an extensive article on the front page of their Saturday edition. The lead is:
In a withering critique of his fellow Republicans, former Federal Reserve Chairman Alan Greenspan says in his memoir that the party to which he has belonged all his life deserved to lose power last year for forsaking its small-government principles.
In "The Age of Turbulence: Adventures in a New World," published by Penguin Press, Mr. Greenspan criticizes both congressional Republicans and President George W. Bush for abandoning fiscal discipline.
and later in the article is the stuff people are going to be interested in:
In coming years, as the globalization process winds down, he predicts inflation will become harder to contain. Recent increases in the price of imports from China and a rise in long-term interest rates suggest "the turn may be upon us sooner rather than later."
Left alone, he said, the Fed's policy-making body, the Federal Open Market Committee, can keep inflation between 1% and 2%, but that could require forcing interest rates to double-digits, a level "not seen since the days of Paul Volcker," his predecessor as Fed chairman. "I fear that my successors on the FOMC, as they strive to maintain price stability in the coming quarter century, will run into populist resistance from Congress, if not from the White House," he writes.
If the Fed succumbs to that pressure, inflation could rise from a little over 2% at present to an average of 4% to 5% by the year 2030, he writes. Ten-year Treasury yields, now below 5%, will rise to "at least 8%" with the potential to go "significantly higher for brief periods." This, he says, will lead to stagnant returns on stocks and bonds and much smaller gains in housing prices.
You are going to be seeing alot of Alan in the next couple of weeks. Here is a head start: