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CNBC's Schacknow: Greenspan’s Reflex Hammer Strikes (Again)

Greenspan’s Reflex Hammer
Yes, Alan Greenspan is no longer Federal Reserve board chairman, but for those who work in business news, a Greenspan speech draws the same reaction as the doctor hitting you on the knee with the reflex hammer: you jump.

On his last day as chairman of the Board of Governors of the Federal Reserve System, Alan Greenspan smiles as he presides over his final Federal Open Market Committee meeting at the the Fed's headquarters in Washington, Tuesday, Jan. 31, 2006. He is speaking to Deborah J. Danker, at left, special assistant to the board, with Vice Chairman Roger W. Ferguson Jr., at right. Greenspan has held the post for more than 18 years and is widely viewed as the most successful chairman in the Fed's 92-year h
J. Scott Applewhite
On his last day as chairman of the Board of Governors of the Federal Reserve System, Alan Greenspan smiles as he presides over his final Federal Open Market Committee meeting at the the Fed's headquarters in Washington, Tuesday, Jan. 31, 2006. He is speaking to Deborah J. Danker, at left, special assistant to the board, with Vice Chairman Roger W. Ferguson Jr., at right. Greenspan has held the post for more than 18 years and is widely viewed as the most successful chairman in the Fed's 92-year h

His influence was seen again Tuesday: the Dow was down as much as 104 points early in the session (but had already erased some of that loss) when Greenspan said he didn’t see the Chinese selling their U.S. Treasury holdings. Those reassuring words for a market spooked by interest rate concerns sent the major averages jumping into positive territory for the first time all day. Essentially, he hit investors on their collective knees with the reflex hammer, and they jumped.

And again, we are asking ourselves a question we’ve all been wrestling with in the year or so since he stepped down: Why does he still hold sway over the markets? Should he? Should he stop making public speeches?

I’m not one of those who think Greenspan should stop speaking. My best take on the situation is this: Reacting to Greenspan is a long-standing habit. Despite the fact that he’s retired from the Fed, many investors react as if he were still in office and still has the clout he had before.

Greenspan’s influence may eventually wane, but as evidenced today, it hasn’t happened yet.