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Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter; a forum for us to use our meager abilities to make the world of specinvestments a better place. |
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3/7/05
Greenspan As Political Lame Duck, by George Zachar
Greenspan's approaching retirement (officially at the end of Jan. 2006) has long focused the financial markets on the question of post-Maestro regime dynamics. Now, like hyenas snapping at the heels of a slowing prey, the Democratic party has decided to re-politicize the Fed, starting with Senate Minority Leader Harry's Reid smear of Greenspan as a "political hack". While "respectable" Washington stood silently or clucked its collective tongue, the Greenspan-as-hack meme raced through the lefty blogosphere, seemingly joining "no blood for oil" and "tax cuts for the rich" as a point of ideological crystallization.
At the margin, this indicates the Greenspan replacement process will have a heavier political cast than previously expected. Speculative implication? A high(er) probability of bombastic headlines putting monetary policy "in play", with the attendant risk of expanded risk premia in a market "price to perfection" in many respects (debt spreads and implieds in particular).