Lessons from Alan Greenspan
We often need to hear Alan Greenspan to be sure about what is going on with the economy.
According to the ex president of the Federal Reserve, the economy is not so strong as the markets are telling us. There is not a solid economic growth he told to the Cnbc. And the reason why we have record highs on the equity markets and bond markets is the Fed through its monetary easing policy. In fact we have P/E at record levels, 30 times the earnings on the Nasdaq market.
Greenspan also remembers us that the weak demand in the economy resembles very much to the one in the Great Depression. The long term rates are also very low and this according to Alan Greenspan confirms that the demand remains very weak even after all this QE.
What Alan Greenspan thinks about how are we going to get out from this weakness ? Everything depends on the time when the Fed will start to increase rates.
Greenspan explains the high long term rates also with the fact that investors are very insecure about the future and they are at the window waiting for a much stronger consumer demand.
So what has to happen, to see consumers consuming much more and investors investing much more, if is not enough all what the Fed has done? This is what Alan Greenspan didn’t tell us. May be he will give us another lesson soon….