Yesterday, former Federal Reserve Chairman Alan Greenspan reportedly told Japanese Finance Minister Koji Omi that the
U.S. economy is, overall, moving upward and showing signs of accelerating again.
A reason for optimism? Maybe not.
The thing is, the former Fed chief has made a few pronouncements in recent months that suggest, at the very least, he has an uncanny knack for bad timing.
Last month, for example, Reuters reported Greenspan Says Expects More Dollar Weakness.
Unfortunately, those remarks came within a week of the U.S. Dollar Index's low for 2006. Since then, the greenback has rallied about three percent and seems poised for further gains amid overly negative sentiment, among other factors.
Back in November, according to the Associated Press, the former central banker also said that
the worst of the housing adjustment was over.
While it is too soon to say for certain whether that is true, of course, it does seem that, once again, he might have been somewhat off the mark.
Indeed, this past weekend, in A Phantom Rebound in the Housing Market, the New York Times suggested that those who believe this
should take another look at the data….For the figures on new-home sales have a strange wrinkle that, in the current environment, may lead the government to overstate sales (and to understate inventory) by up to 20 percent. “The market is weaker than the data say,” said Mark Zandi, chief economist at Moody’s/Economy.com.
New-home sales are tallied by the Census Bureau, based on a sampling of contracts signed by home buyers. Running at a pace of more than one million a year for the last four years, new-home sales have been a significant contributor to the housing boom — and to the economy. (Existing-home sales, reported monthly by the National Association of Realtors, count actual closings.)
But here’s the rub: If a contract to buy a home, signed in November, is canceled in December, the Census Bureau does not subtract the failed transaction from the number of sales, or add the house back to its inventory total. In the last year, as the housing market has cooled, the volume of cancellations has risen to epidemic proportions.
Last but not least is "the Maestro's" apparent bullish call on oil. Back in July, the International Herald Tribune reported Greenspan Sounds Alarm on Oil Supply, where he noted that
the buffer between supply and demand was extraordinarily thin and that price spikes were a risk.
Again, his prognostications proved to be something of a contrarian signal. Since that time, crude oil futures have actually fallen by about 25 percent, hit by massive speculator liquidation, faltering demand, and rising inventories.
With all this in mind, maybe it's not such a good idea to get too worked up about Mr. Greenspan's latest pronouncement.
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