Hedge Fund Reader : Alan Greenspan believes U.S. has become more matured

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October 01, 2005

Alan Greenspan believes U.S. has become more matured

Federal Reserve Chairman Mr. Alan Greenspan said via satellite to the National Association of Business Economics annual meeting in Chicago, that advanced pricing options and other complex financial products have lowered the cost of hedging risks. The new risk dispersal instruments have enabled banks to bypass credit risk to insurance companies, re-insurers, pension funds, and hedge funds who are willing, at a price, to supply credit protection. The said that the economy has become more flexible, efficient, and a resilient financial system which that can mitigate most significant shocks like higher prices in oil and natural gas, and a near bubble burst which could happen in the near future like the housing industry. He also states that automatic market adjustments correct imbalances faster than administrative or policy actions so drastic regulators curbs need not be so effective. Lipper HedgeWorld Reports:

If we have attained a degree of flexibility that can mitigate most significant shocks—a proposition as yet not fully tested—the performance of the economy will be improved and the job of macroeconomic policymakers will be made much simpler," Mr. Greenspan said.

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October 1, 2005 in Regulation, Strategy | Permalink