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2005-06-07 Home Front: Economy

Greenspan says markets signalling weakness

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Posted by too true 2005-06-07 10:27|| || Front Page|| [1 views since 2007-05-07] Top

#1 Surplus capital formation. Too much capital chasing too few investment opportunities.

Posted by Shipman 2005-06-07 16:29|| 2005-06-07 16:29|| Front Page Top

#2 oooh oooh! Me! Pick me!

Posted by Frank G">Frank G 2005-06-07 17:04|| 2005-06-07 17:04|| Front Page Top

#3 Shipman is right. The reason longer maturity bonds etc., traditionally have higher interest rates is more time = increased risk (not only of inflation). Essentially the market is saying we see no future risks or at least we see future risks declining over time. What seems to be happening is excess liquidity is chasing returns and bidding down future risks to zero (which is what I think Greenspan is saying here - policymakers need to be able to rely more on the markets' self-adjusting prices). Only time will tell if they are right.

Posted by phil_b 2005-06-07 18:10|| 2005-06-07 18:10|| Front Page Top

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