catallaxy files

catallaxy in technical exile

So farewell, Alan …

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From the perceptive and always entertaining Andy Xie, economist at Morgan Stanley:

“On Monday, October 19, 1987, everyone in the US was talking about the 500-point drop of the Dow Jones index on the previous Friday. Some economists were recalling memories of 1929. Mr. Greenspan, the new Fed Chairman, came out, made a brief statement and cut interest rates. Everyone stopped worrying. The economy kept going without a hitch…

“At the time, I could not figure out what Mr. Greenspan was saying. I thought that my economics were not good enough to understand the Chairman’s musings. Over time, I realized that nobody could. That is his magic: he leaves so much to the imagination. Financial markets could work out the best scenario and Mr. Greenspan would just follow. It has been the greatest show on earth … He has played the role of chief psychiatrist for financial investors and has nudged the market in an optimistic direction.”

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Written by Admin

January 28, 2006 at 12:42 pm

Posted in Uncategorized

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