Mr. Greenspan speaks (again)
I really wish I could be at the same investment conference in Bermuda where Alan Greenspan spoke yesterday. Not just because of the setting, of course, but I'd really like to have heard his remarks in full, so I could assess to what degree the man has lost his marbles.
As it is, I have to settle for bits and pieces filtered through the establishment media. Most of it was pretty prosaic, keen-grasp-of-the-obvious kind of stuff — financial markets are still gun-shy about subprime-backed securities, housing prices will keep going down because there's too much inventory, still less than a 50-50 chance of recession, etc., etc. (Heck, he doesn't know half the story.)
But this caught my eye:
On a more upbeat note, Greenspan said that while the recent surge in oil prices is clearly having a "significant impact" on the economy, he has mixed feelings because the climb in prices is "forcing us to break our addiction to oil" at a time when the world is getting closer to the point where it is becoming harder to extract oil around the globe.
He suggested that the argument that high oil prices are helping to restrain global economies, potentially keeping inflation under wraps, "is not an altogether crazy" thesis.
Gee, I was under the impression that this was actually the mainstream consensus thesis — economic growth can't keep pace with high oil prices — but he's putting it out there as some sort of out-there, cutting edge, dare-I-say contrarian point of view.
But has he looked at inflation figures around the world lately? Wages are up nearly 20% in China this year. India just ordered banks to up their reserve ratios. Inflation is in no way "under wraps," and emerging economies seem to be handling high oil prices just fine, thank you.