Well it has, according to evening reports in London.
>Stock markets around the world were sent into decline on Friday after
>Alan Greenspan, the chairman of the US Federal Reserve, warned banks
>to set aside more money as insurance against a significant downturn
>in the financial markets.
>
>While stressing he was not predicting a crash in stocks, Mr Greenspan
>told a banking conference in Washington that sudden losses in
>investor confidence inevitably occurred from time to time and urged
>financial institutions to increase their reserves to account for that
>possibility.
He gave the interesting analogy, that such reserves may seem unproductive, like fire insurance, but just as necessary.
I have a hunch that insurance in the broadest sense is the achilles heel of finance capital. The need to guard constantly against risk may give rise to disturbances from chain reactions. But also the need to discount, if successful, homogenises the social processes.
Presumably Greespan was attempting to defuse the fall and let the steam out of the market gradually. But his logic is that there may be a credit crisis in the heart of the USA. I can't see his speech was reported as saying that could have an effect in turn on consumer spending and the whole economy.
Can he stabilise the system or will he be seen as having triggered the destabilisation of the system? The odds could be finely balanced.
Chris Burford
London