Saturday, May 08, 2004


On Thursday, Fed Chairman Alan Greenspan made some noise by voicing concern about the expanding federal budget deficit. Did he just wake up from a deep sleep? Why the sudden warning? Greenspan has been on record as one who has not raised red flags concerning the ballooning deficits, and in fact was a supporter of the absurd, for-the-ultra-rich tax cuts -- a big contributor to the massive red ink. Forbes points out "when the deficit problem was starting, Greenspan was nowhere. He blessed the tax cuts saying that surpluses were a problem."

I've long felt that Greenspan has been sending out mixed signals to the point where he has begun to sound schizophrenic. Granted, this latest statement is likely just an overture to prepare the market for higher interest rates, but if there's one thing the financial markets dislike it's inconsistency and it would appear as if Greenspan is being increasingly forced to exhibit odd behavior.

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