The stock market was on a major bullish tear earlier today, with investor confidence high and money pouring into every nook and cranny -- that is, until Alan Greenspan addressed an audience in Madrid and declared that he "feared" a dramatic contraction in Chinese stocks.
"In the last five years, the world as a whole is growing faster than at any time in the world`s history," Greenspan said. "It can`t last and it won`t last because it`s a one-shot adjustment."
Almost immediately after his remarks, the DOW dropped 14 points, the S&P slipped on its own black ice and the NASDAQ bled over 10 points.
What nobody seems to be reporting, however, is that Greenspan recently accepted a lucrative consulting position with PIMCO, the world's largest Hedge Fund with over $687 billion dollars under management. Of course, the financial details of Mr. Greenspan's compensation are entirely undisclosed.
Nice work if you can get it, eh?
But the problem here is that when Greenspan talks, the market moves, and with Greenspan now on the payroll of PIMCO, it doesn't take a genius to wonder how much money PIMCO's funds raked in on short positions when Greenspan opened his very influential mouth and set the markets tumbling . . .
It's not like he hasn't done this kind of thing before.
So the question is, should Alan Greenspan continue to make public pronouncements regarding world markets, especially now that he's on the payroll of a gihugic Hedge Fund? Or is Greenspan's ability to move markets with just a well-turned phrase the very reason he was hired as a "consultant" in the first place?
Imagined conversation in the halls of PIMCO: "Hey, Alan -- I have a mortgage payment due on my villa in Tuscany. Can you go out and express a bit of concern about the Asian markets again? Thanks, buddy. I owe you one."
"Unethical" doesn't even begin to cover it.