Greenspan’s Impact.

Posted by | July 24, 2007 | blog, Weblogs | No Comments

His last speech might have left many speechless, after he commented on ‘China Economy’. But now he has tracked the path of the present liquid situation in the market, to the saving habit of the ‘developing nations’. He was talking to “Building owners and Manager Association’s International Conference in New York. Adding to the reason for liquidity Greenspan has reiterated the fact that it’s reflective of a one shot thing, and that we are only half-way through the same.
Craig Torres and Anthony Massucci’s article in Bloomberg.com reports on Greenspan’s views on various topics from the liquidity in the market to oil. Greenspan goes on to say that the market will have to confront the gradual decline in foreign savings flow. Though the dollar has dropped about 4.5% against the Euro, this drop has not dampened the spirit of investment in U.S. Securities. Citing the case of China which has emerged as one of the major exporter in the world, the U.S Dollars earned by the economy was ploughed back into the U.S itself in terms of securities, but again with increased income, consumption would increase in China and the outflow would gradually decline.
Reiterating the fact that U.S has to reduce its dependency on oil, Greenspan goes on to say that the only way to reduce the consumption is to increase the price and this seems to be happening right now!
This article really gave an insight into the flow of the fund and the reason for the markets ‘doing well’ in spite of the dollars “doing not so well”

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