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Mix-Ansicht- Greenpan's Testimony-- Reading Between The Lines - Cosa, 17.07.2002, 12:21
Greenpan's Testimony-- Reading Between The Lines
Hi,
noch ein Kommentar zur Rede Greenspans gestern....
<font size="4">Greenpan's Testimony-- Reading Between The Lines</font>
Greenspan's Senate testimony today was his usual mix of reaffirmation of the economic
recovery along with a listing of serious caveats. In addition he devoted about half of his
testimony to the corporate governance problem, and was highly critical of management
behavior.
After saying that the economy has held up remarkably well, he referred to the depressing
effects of recent events, indicating that spending would continue to adjust for some time to
the decline in equity prices. He spoke about other uncertainties including corporate capital
spending plans, the rebound in profitability, additional revelations about corporate malfeasance,
and risks from global political events and terrorism.
Expanding his remarks on the economy, Greenspan stated that as the contribution of
inventories to GDP growth lessened, final demand would have to take up the slack, but that this
was still uncertain. He noted that because consumer and residential expenditures did not
decline during the downturn, a surge in spending now was unlikely, particularly given the decline
in household wealth over the past couple of years. He acknowledged that business spending
was depressed, but that it"may be" set to improve although the recovery would be gradual by
past standards and uneven across sectors. He stated that businessmen were unusually
cautious because of the lingering effects of the economic shocks in 2000 and 2001,the poor
pricing environment, anemic profits and low nominal sales growth. He indicated that as a result
of these concerns, managers continue to limit capital spending to only the most pressing needs.
Significantly, the Chairman added that the adverse publicity on accounting practices could limit
business access to financing, resulting in heavier emphasis on internal cash generation and
accumulation. This, too, would have the effect of slowing new capital investment initiatives.
Overall, Greenspan's caveats to his recovery thesis sound an awfully lot like our own negative
outlook for the economy as expressed in our past daily comments. In fact the two strong points
in his outlook - consumer and residential spending - are highly dependent on increased debt at
the very time when record indebtedness is already a severe problem. We continue to believe
that the economic recovery is highly fragile and will either fall back into recession or continue to
be anemic. Judging from the numerous caveats to his main conclusion, Greenspan may also be
worried about that possibility, but as a central banker he cannot be that direct.
Quelle: comstock.com
Gruss
Cosa
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