Alan Greenspans successor
US President George W. Bush has named Ben S. Bernanke as the successor to Alan Greenspan. We will find out whether the decision was a good one or not in the next few years. In any case, it remains a fact that Alan Greenspan provided cheap money for the financial markets and consumers. This led to in parts extreme overvaluations on the capital markets, and steep rises in real estate prices. Especially investors with a responsibility to safeguard capital (for example pension funds), who did not trust the crazy situation, have now also forced up prices on the pensions markets. They are frightened into the pensions markets by the fear that current trends will flip into their opposite. Paradoxically, they would also lose money in the pension markets if interest rates rise. This implies that the fear of a real crash in the stock and real estate markets must be so high that the losses in the pension markets are seen as the lesser evil. But how are pension funds to make any kind of return? This atmosphere is good news for some in the stock market, where some shares deliver increased dividends.
I shall finish my assessment with a simple question:
What happens to a hamster if he just keeps running faster in his wheel?
