Greenspan needs to decide if he's an economist or a politician

by Prometheus 6
November 20, 2004 - 4:38am.
on Economics
Share prices pressured by Greenspan warning on trade gap; Dow down 115 - MICHAEL J. MARTINEZ, AP Business Writer Friday, November 19, 2004 Click to View (11-19) 16:56 PST NEW YORK (AP) -- Stocks fell sharply Friday, with the Dow Jones Industrials losing more than 115 points, as Federal Reserve Chairman Alan Greenspan sounded a warning over the nation's spiraling trade deficit. Crude oil futures rose more than $2 per barrel, further pressuring stocks. Greenspan's unusually frank assessment of the trade imbalance and its effect on the U.S. economy worried many investors. The Fed chairman said the economy was resilient thus far, but foreign investment could wane should the deficits continue to build and the U.S. dollar remain weak. "Certainly that has investors worried, though I'm not entirely sure why Greenspan chose to make a case out of this," said Lincoln Anderson, chief investment officer at LPL Financial Services in Boston. "The lower dollar will eventually force importers to raise prices, and that'll help cut the trade deficit. But nonetheless, it was unusual for him to speak out on it like that, and it's having an effect."

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