Latest news with #AlanGreenspan
Yahoo
07-07-2025
- Business
- Yahoo
Opinion - Jerome Powell is competing to be the worst Fed chair in history
By stubbornly refusing to lower interest rates despite ample data urging him to do so, Fed Chairman Jerome Powell is committing his third major policy blunder in six years. If he continues this tight-money path through the July 29 Fed meeting, 'Too Late' Powell will go down as the worst Fed chair in history. It's not like Powell lacks stiff competition. In the 1970s, to boost Richard Nixon's re-election run, uber‑partisan Arthur Burns kept rates too low for too long, triggering a dizzying inflation spiral and a decade-long stagflation. In the 1990s, Alan Greenspan severely underestimated productivity gains from the tech boom, over-estimated inflationary pressures, and needlessly hiked rates — six times between June 1999 and May 2000. This spiked the federal funds rate to 6.5 percent, triggering the dot-com market crash and 2001 recession. A whiplashed Greenspan then slashed rates to rock-bottom levels and held them at 1 percent for a full year — from June 2003 to June 2004 — well beyond what the recovery warranted. This ultra-cheap money fueled reckless lending, a massive housing bubble, and ultimately detonated the 2007–2008 financial collapse. Greenspan's successor, Ben Bernanke, should have seen it coming. But the Princeton don failed to grasp rising systemic risk in mortgage markets. His paralysis turned what might have been a contained correction into a full-blown global financial crisis — only intervening after Lehman Brothers fell, when it was already too late. Now enters Jay Powell. Even though he leads the world's largest economy, he is a lawyer, not an economist — an anomaly among Fed chairs. Since Arthur Burns, every Fed chair has held an economics degree, except for G. William Miller and Powell. Miller was similarly unqualified and endured one of the most disastrous Fed tenures in recent memory spanning just 517 days before being replaced by the esteemed Paul Volcker on August 6, 1979. Powell's audition for 'worst Fed chair' began shortly after his February 2018 appointment. Promising President Trump in the Oval Office a supportive posture to secure his nomination, Powell instead aggressively raised rates into the low-inflation, high-growth Trump economy. Powell wrongly believed Trump's tax cuts and tariffs would spark inflation — they didn't. Nor did Powell understand that Trump's efforts to deregulate the economy and reach energy independence — positive 'supply shocks' in the macroeconomics vernacular — would provide positive deflationary benefits. As Powell's Fed hiked interest rates four times in 2018—despite muted inflation and strong labor market gains — economic momentum slowed sharply. According to the Fed's own September Tealbook, most of the expected GDP slowdown — from over 3 percent to 1.5 percent — was due to Powell's blunder. Trump was justifiably outraged over Powell's first blunder. It would cost the American economy hundreds of thousands of jobs and hundreds of billions of dollars in lost economic output and tax revenues. After Trump left the White House in January 2021, Powell successfully lobbied Joe Biden for a second term. Throughout that year, the Powell-led Fed kept interest rates near zero, even as inflation surged past 5 percent by mid-year. Embracing the Biden-Yellen line that inflation was merely 'transitory,' the pandering Powell refused to act. Despite growing warnings from economists and business leaders, Powell waited until March 2022 — more than a year after inflation had begun accelerating — before implementing the first interest rate hike since 2018. By then, the damage was done. The Fed was forced into one of the most aggressive tightening cycles in history — 11 hikes in 12 months — all to combat the inflation that Powell's inaction had helped unleash. Powell's second major blunder here wasn't just his late policy; it was his silent permissiveness. While a Democrat-controlled Congress passed over $2 trillion in unneeded and wasteful spending bills — in no small part to boost the Biden reelection campaign — Powell failed in his ethical duty to warn the White House and Democrat-controlled Congress that this spending would worsen inflation. Instead, he let loose monetary policy and partisan fiscal profligacy collide, accelerating the very inflation he would soon be forced to chase. Today, with inflation returning to target and disinflation gaining traction, Powell is well on his way to his third blunder with his stubborn refusal to lower interest rates now. Powell seems incapable of recognizing that Trumponomics — driven by pro-growth deregulation, productivity-enhancing tax cuts, strategic tariffs, and America First supply chain policies — is again delivering strong GDP growth and low unemployment without fueling inflation, just as in Trump's prosperous first term. Powell's misguided fixation on so-called tariff 'uncertainties' as a rationale for 'prudently' holding rates steady is particularly imprudent. Let's remember clearly: during President Trump's first term, we imposed tariffs strategically and aggressively — and the predicted inflation never materialized. Powell's hesitation reflects a failure to learn from recent economic history, needlessly stifling growth, undermining American competitiveness, and harming millions of Americans. At its next meeting July 29-30, the Fed must immediately begin cutting rates. If Powell won't adjust course, he will indeed have earned the sobriquet of worst Fed chair. Peter Navarro is White House senior counselor for trade and manufacturing. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
02-07-2025
- Business
- Yahoo
‘Irrational Exuberance' Stock Gauge Sparks Fresh Bubble Worries
(Bloomberg) -- Wall Street speculators have returned in full force: US stocks have snapped back from the throes of April's tariff selloff, hovering near record highs, the pipeline of new SPACs is rebounding and Cathie Wood's flagship fund is on a historic tear. Struggling Downtowns Are Looking to Lure New Crowds Sprawl Is Still Not the Answer California Exempts Building Projects From Environmental Law What Gothenburg Got Out of Congestion Pricing That's sparked a swift jump in a Barclays Plc measure of the market's 'irrational exuberance' — a phrase coined by former Federal Reserve Chair Alan Greenspan for when prices exceed assets' fundamental values. The one-month average on the proprietary gauge has swung back into the double-digits for the first time since February — reaching levels that have signaled extreme frothiness in the past. The bank noted that the measure, which is calculated from derivatives metrics, volatility technicals and sentiment signals inferred from options markets, has historically averaged around 7%, but occasionally it peaks above 10% as during the Dotcom era of the late 1990s, and the meme-stock frenzy of 2021. The gauge currently sits around 10.7%, data compiled by Barclays show. 'Fundamentals have taken a back seat again as stocks with hot narratives are trading like lottery tickets,' said Dave Mazza, chief executive officer of Roundhill Investments. He points out sentiment gauges like relative strength readings and valuation multiples are once again looking extended. 'That sets the stage for a sharp air-pocket on the next bad headline.' Animal spirits have been revived on optimism that the US is making progress on reaching trade deals with key partners — or that President Donald Trump will at least postpone his July 9 tariff deadline. There's also speculation the Federal Reserve will cut interest rates. The upshot is that stocks set a record high on Friday for the first time since February. Frothy Signals Barclays sees abundant signs of froth, with listings of new blank-check companies in 2025 already surpassing the last two years combined. Meanwhile, Cathie Wood's ARK Innovation ETF (ARKK) — a proxy for profitless technology firms — posted one of its best rallies in history, second only to the post-Covid surge. In the second quarter, Bitcoin-linked firms rallied 78%, while quantum computing shares climbed 69% and meme stocks advanced 44% — all volatile corners where investors are betting on future returns that may not materialize. A basket of highly shorted securities rallied 29%. 'Elevated readings of the indicator suggest that investors may be overly exuberant, which could lead to increased market volatility,' said Stefano Pascale, head of US equity derivatives strategy at Barclays. Pascale described the exuberance measure, which the firm dubs its Equity Euphoria Indicator, as measuring the proportion of euphoric stocks within a universe of US equities that have liquid options. It correlates with other popular metrics that measure retail investing, such as the net debit position of margin accounts, which shows the amount of borrowed money for a trade. Despite elevated levels, Pascale argues that bubbles are difficult to time and can expand for extended periods before correcting. As such, he recommends riding the wave for now and hedging with options to curb potential losses if things go awry. --With assistance from Jan-Patrick Barnert. SNAP Cuts in Big Tax Bill Will Hit a Lot of Trump Voters Too How to Steal a House America's Top Consumer-Sentiment Economist Is Worried China's Homegrown Jewelry Superstar Pistachios Are Everywhere Right Now, Not Just in Dubai Chocolate ©2025 Bloomberg L.P.
Bloomberg
14-06-2025
- Business
- Bloomberg
Dollar Ructions Lay Groundwork for a ‘Global Euro Moment'
When the euro was born more than a quarter century ago, it arrived with much fanfare. Even the US Federal Reserve chair of the time, Alan Greenspan, was excited. 'To the extent the euro becomes a far more formidable force in the world economy, it's a benefit to everybody, especially the US,' he said in January 2000. Today, while undoubtedly the second-most important reserve currency in the world, the euro holds a shadow of the dollar's influence. European economic policymakers, with plenty of intra-region challenges and crises to keep them busy, had little reason to imagine the euro's global role might do anything other than fade. Until Donald Trump's White House return, that is.
Vox
11-06-2025
- Business
- Vox
Can pop music actually predict a recession?
is the host of Explain It to Me, your hotline for all your unanswered questions. She joined Vox in 2022 as a senior producer and then as host of The Weeds, Vox's policy podcast. But how do we really know if there's an impending economic contraction? 'There's a super wide variety of what qualifies as a so-called 'recession indicator' on the internet,' Wall Street Journal markets reporter Hannah Erin Lang told me in the latest episode of Explain It to Me, Vox's weekly call-in podcast. 'Economists and investors are often looking at these offbeat sources of data or offbeat trends. Former Federal Reserve chair Alan Greenspan famously looked at sales of men's underwear with the idea being that if you have to cut back, this might be a place where nobody else is going to know but yourself.' There's another alleged recession indicator taking the internet by storm: music. People are now referring to the late-aughts and early 2010s dance hits as 'recession pop.' But is there any credence to this supposed harbinger of economic downturn? That's the question posed to Switched on Pop cohost Charlie Harding on this week's episode of Explain It to Me. Below is an excerpt of our conversation, edited for length and clarity. You can listen to the full episode on Apple Podcasts, Spotify, or wherever you get podcasts. If you'd like to submit a question, send an email to askvox@ or call 1-800-618-8545. Does music change with the economic outlook? We're all looking for a crystal ball, and music feels like it's got to be it because that's where we go to get into our feelings. So are our playlists indicating larger economic trends? I don't think so. That's interesting because lately there's been all this talk of recession pop. What is recession pop referring to? Recession pop is a made-up, after-the-fact genre, referring to upbeat, bubblegum pop music from the time of the Great Recession. We're talking about Black Eyed Peas, Lady Gaga, Kesha. I think that Katy Perry's whole oeuvre represents that era better than any other. We're talking about songs like 'Teenage Dream,' a song which has this ongoing chord progression that never resolves, that makes you have the feeling of the teenage life that will just never end, you're never going to grow up, and it has this wonderful nostalgic quality to it. Or 'Last Friday Night': the party that is the rager that you're gonna go all-out in. Those songs had a light, effervescent, post-disco, very poppy programmed music kind of vibe. I want to go back in time to the time of bolero jackets and statement belts... You do? Well, okay, not literally. But we're going to go on this journey. What was the sound of that time? It has to sound a little over-polished, really well-made, programmed music. Meaning drum machines, synthesizers, guitars in the line of like Nile Rodgers from Chic — but not nearly as well done — sort of funk-style, disco-style guitars. You might have some really cheesy programmed strings in the background. Then the lyrics have to be either 'Party, party all night forever!' or larger platitudes about being a girlboss. What else was going on in music during that time? Other than these fun, poppy, 'we're going to party all night long' songs. Music had been going through a recession for half a decade at that point. Ever since the turn of the millennium and Napster, the illegal downloading market basically had eviscerated the music industry. It saw its revenues cut in half. Business was in freefall, to the degree that they thought that their future was in downloadable ringtones. Indie music was really big as the mainstream labels were struggling to figure out how to make sales. Hip-hop was going through a bling and party era. There was a lot of upbeat music during these uncertain times, that's certainly true, [but] I think it's important to note as well that during the Great Recession there was plenty of music which didn't reflect an upbeat attitude. One of the biggest songs of 2007 was 'What Goes Around Comes Around' by Justin Timberlake. [There's also] 'Umbrella' by Rihanna. I don't think of those as upbeat, happy songs. If you have to protect yourself from the rain under an umbrella, this is more acknowledging our deep upset at the national condition. I think that even in the recession pop era, there's music of all kinds: upbeat, downbeat, sad, happy. And so I actually think that the genre is a very slippery one that represents a lot of different kinds of music. Are we hearing that sound pop up now? Some people have said that Chappell Roan and Charli XCX are digging into the recession era in their new music. I'm a little more skeptical. If recession pop were doing really well right now, Katy Perry's 'Woman's World' would have been a huge hit, and it has been a real stinker for her. Why are we talking about recession pop right now? Everyone's looking for vibes of what's going on in the larger economy, but I think more largely, millennials are aging out of being cool. Oh, no. You stop listening to new music usually between 25 and 30 years old. And then when you get into a position of power where you become a curator of culture, now it's your time to assert: The thing that was good when I was young is still good. So this could be less about the economy and more about like those of us born in the '80s and early '90s kind of having a midlife crisis. Absolutely, I think there was a huge cultural midlife crisis and a claiming of power. I've seen tons of bars and clubs during these recession pop dance parties and I'm hearing like all these samples in music from current artists from that era. How do you explain all this? Recession pop is very much a real thing and it's completely made-up. There was no such thing as recession pop during the recession. It's a term that was made up only very recently.
The Guardian
04-06-2025
- Business
- The Guardian
Are we heading for a recession? Show me your nails
Is there going to be a recession this year? Economists have been umm-ing and ahh-ing and crunching the numbers, but the answer could be at the tip of your fingers. According to various expert sources (influencers on TikTok), a wobbly economy means people are ditching elaborate and expensive manicures for more understated styles. Cue numerous headlines about 'recession nails'. When I first saw these headlines, I felt pretty smug. An inadvertent trendsetter, I have been rocking recession nails for the past decade now. Except I have been calling them 'freelance lesbian nails'. Or, alternatively, 'harried parent nails'. Then I read past the headlines and was no longer quite so smug. Turns out that the trend doesn't mean frantically cutting your nails with a cheap clipper while yelling 'BE THERE IN A MINUTE!' to your four-year-old who has discovered that there is leftover cake in the freezer. It means, from what I can gather, a neutral pink shade on manicured squoval (square-oval) nails that aren't super-long but are still very polished. Can nail trends really serve as an economic indicator? Possibly. After all, we all know about the 'lipstick effect': the idea that people will splurge on affordable luxuries when times get tough. There's also the 'men's underwear index', espoused by economists such as the former Federal Reserve chief Alan Greenspan. This is the idea that you can tell a recession is real when men forgo new undies. Divorce rates and hemline lengths have also been previously cited as recession indicators. Still, while certain pockets of discretionary spending may provide insights into the economy, some experts think we shouldn't get too carried away by recession nails. The economist Christopher Clarke recently told the HuffPo: 'Things go in and out of style, and that has nothing to do with the economy, it just has to do with the seasonality of human preferences.' Clarke added that key recession indicators are not manicures, but a rise in the overall unemployment rate and investments going down. OK, Clarke, thank you for your input, but all that sounds a little bit too much like common sense to me. You can't go viral on the internet by saying: 'Look at unemployment charts and job-finding rates to figure out if we're in a downturn,' can you? Not in this economy. Arwa Mahdawi is a Guardian columnist
