Dropping The R-Bomb
When Alan Greenspan speaks, people tend to freak. That's why, during his 17 years as chairman of the Federal Reserve, Alan Greenspan only held a handful of press conferences.
Which is part of the reason why the markets tended to fluctuate based on how thick his briefcase was or how his glasses happened to be tilted.
At least that's what Greg Robb believes. He argues as much in MarketWatch following a kerfuffle over Greenspan (who, of course, isn't even the Fed chairman anymore) dropping the "r-bomb" last month. (That's right, recession.) Greenspan made the comment during a forum in Hong Kong that was closed to the media. Inevitably, his statements leaked out, and now Greenspan says they were misconstrued.
Now that he's retired, Greenspan's policy when discussing the economy with clients is to insist that "there will be no reporters present and no recording."
But it may be just that stipulation which creates all the hoopla, writes Robb. Since there are no reporters from reputable news outlets covering his remarks, news moves based on rumor. And, as one economist put it to MarketWatch: "You know what markets always say, buy the rumor, sell the fact. By the time you figure out it was wrong, the markets move, people have been in and out, they've made their money."
So even though Greenspan is attempting to avoid becoming the impulse for market changes, his decision to refuse "to allow reporters to listen in and report on his remarks [is] actually creating market volatility."