Goodbye Greenspan – We Hardley Knew You!

Mr. Greenspan has done a wonderful job steering the worlds largest economy. Some say he has been more influential than Presidents Reagan/Bush I/Clinton & Bush II in guiding and assuring the success of the American economy. I was most impressed by his handling of the Asian Money Crisis of 1997 than any other thing – in my opnion that is when he proved to the world why he is the genius of monetary policy!

Here are some key dates during Alan Greenspan’s 18 1/2-year tenure as chairman of the Federal Reserve:

Aug. 11, 1987: Greenspan takes over at the Fed after being picked by President Ronald Reagan to succeed Paul Volcker. Greenspan will be renominated by both Presidents Bush and President Clinton.

Oct. 19, 1987: “Black Monday.” The Dow Jones industrial average suffers a record one-day plunge of 23 percent. Greenspan spurs a rally the next day when the Fed issues a brief statement promising to lend to any financial institutions in distress.

July 1990: The economy enters a brief, mild recession in which oil prices spike after Iraq invades Kuwait on Aug. 2.

March 1991: Recession ends and a record 10-year economic expansion begins.

Feb. 4, 1994: The Fed for the first time announces publicly it is changing its key policy lever, the federal funds rate. That is the interest rate that banks charge each other.

September 1996: Greenspan persuades his Fed colleagues not to raise interest rates, arguing that worker productivity is rising faster than government statistics are showing and this will allow unemployment to fall to lower levels without generating unwanted inflation.

Dec. 5, 1996: Greenspan delivers a speech in which he wonders whether the stock market’s rise reflects “irrational exuberance.” Stocks plunge but then resume rising.

Sept. 29, 1998: The Fed announces the first of three rapid-fire interest rate reductions in a successful effort to cushion the U.S. economy from the impact of the Asian currency crisis and the near-collapse of a giant hedge fund.

Jan. 14, 2000: The Dow Jones industrial average hits an all-time high of 11,722.98. In coming months, the stock market would plunge in value, wiping out trillions of dollars in paper wealth.

Jan. 3, 2001: The Fed unexpectedly cuts interest rates in-between meetings by one-half of a percentage point. It is the start of an aggressive series of moves to bolster the economy in the wake of the market decline and a sharp drop in business investment.

Jan. 25, 2001: Greenspan testifies to a congressional committee that huge projected budget surpluses — which in the end do not happen — provide room to cut taxes. The comments help the current president win approval for $1.3 trillion in tax cuts.

March 2001: A recession begins, ending the longest expansion in U.S. history.

Sept. 11, 2001: Greenspan is returning from a conference in Europe when his plane is diverted from American airspace because of the terrorist attacks. Fed Vice Chairman Roger Ferguson releases a statement saying the Fed stood ready to provide loans to banks in financial distress.

November 2001: The recession ends but job losses mount as businesses strive to be more competitive with smaller work forces.

June 25, 2003: The Fed cuts its target for the federal funds rate to 1 percent, the lowest in 45 years. The central bank tries to jump-start economic growth while guarding against the remote possibility of deflation, an unstable decline in prices.

June 30, 2004: The Fed begins the first in a series of quarter-point of a percentage point increases in the interest rate to gradually remove economic stimulation. The 14th rate increase in this series, which would push the funds rate to 4.5 percent, is expected Tuesday.

Oct. 24, 2005: Greenspan attends an Oval Office ceremony in which Bush announces that he will nominate Ben Bernanke, the chairman of the president’s Council of Economic Advisers, to succeed Greenspan


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