New York Times July 17, 2002
Yes, He Can Top That
By FLOYD NORRIS
"I nfectious greed."
The man who gave us "irrational exuberance" is back, with a phrase
that sums up the late 1990's even better than that one did.
"An infectious greed seemed to grip much of our business community,"
the Federal Reserve chairman, Alan Greenspan, told the Senate Banking
Committee yesterday. The way he sees it, the incentives created by
poorly designed stock options "overcame the good judgment of too many
corporate managers."
"It is not," he added, "that humans have become any more greedy than
in generations past. It is that the avenues to express greed had grown
so enormously." Stock options meant that executives could get rich if
they faked profits, and fake them they did.
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In 1996, Mr. Greenspan briefly terrified investors after he used the
"irrational exuberance" phrase in a rhetorical question. But he soon
backed off from it. Any idea that he might try to slow the market's
rise, either by raising interest rates or by tightening margin
requirements on share purchases, was soon forgotten.
Just for the record, all the major averages are still higher than they
were when the phrase "irrational exuberance" entered the lexicon.
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