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Mix-Ansicht- Viele Fragen an Greenspan (E) - Oswald, 13.11.2002, 15:19
Viele Fragen an Greenspan (E)
-->Greenspan to explain himself
Congress has plenty of questions about the economy
By Rex Nutting, CBS.MarketWatch.com
WASHINGTON (CBS.MW) - Federal Reserve Chairman Alan Greenspan will have some explaining to do when he testifies before Congress Wednesday morning.
The lawmakers at the Joint Economic Committee will want to know how Greenspan thinks the economy is performing and what it will take to bring back the good times. Greenspan's testimony begins at 10 a.m. Eastern.
They'll want to know why the Federal Open Market Committee slashed interest rates by half a percentage point to 1.25 percent last week, and then turned around and tried to reassure the nation that everything is fine with the economy.
They'll want to know why the economy is still struggling more than two years after the first hints of trouble emerged.
They'll want to know what it will take to get the stock market back on its feet, workers back on the job and companies producing at full capacity again.
They'll want to know whether he thinks the economy needs another jolt of fiscal stimulus from tax cuts, jobless benefits, revenue sharing or federal government spending.
They'll want to know what will happen to the economy if war with Iraq comes.
Economists say Greenspan will likely hew to the cautiously upbeat line he and his fellow governors at the Federal Reserve have followed all year.
The Fed's vice chairman, Roger Ferguson, summed up the Fed's case in a speech Tuesday, saying"The pieces are in place to engender a gradual strengthening in economic activity in coming quarters."
The White House has the same view. Treasury Secretary Paul O'Neill and other policymakers in the administration have been insisting that the economy is on a"bumpy path" to full growth.
Others aren't so sure the economy is on the right path.
Chief executive officers at 200 of the nation's biggest corporations issued a very pessimistic outlook on Tuesday. The Business Roundtable said its survey of CEOs shows few expect to hire workers or invest in more capital equipment in the coming year.
The Fed knows the business community and consumers are worried. That's one reason the FOMC cut rates."It was a Bill Clinton rate cut," said Cary Leahey, economist at Deutsche Bank."It was an I-feel-your-pain rate cut."
The bears say the Fed is whistling past the graveyard, putting up a false front of optimism in the face of a gloomy outlook. Global productive capacity exceeds global demand, a recipe for the doomsday scenario of global deflation.
According to recent minutes of FOMC meetings and recent comments by Fed officials like Ferguson, deflation remains a very remote possibility.
The lawmakers will surely want to know what Greenspan thinks.
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