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I’m a better economist than I was a sax player.

Alan Greenspan

What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so.
ALAN GREENSPAN

Derivative Extraordinary Marketplace Over Useful Year
How do we know when irrational exuberance has unduly escalated asset values?
ALAN GREENSPAN

Escalate Exuberance Irrational Unduly Value
The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions…
ALAN GREENSPAN

Application Approach Derivative Grow More Relate Sophisticate Use
Any informed borrower is simply less vulnerable to fraud and abuse.
ALAN GREENSPAN

Abuse Borrower Fraud Inform Less Simply Vulnerable
Political decisions are never random and will always lose out to innovative alternatives.
ALAN GREENSPAN

Alternative Decision Innovative Lose Political Random
When trust is lost, a nation’s ability to transact business is palpably undermined.
ALAN GREENSPAN

Ability Business Loss Nation Palpably Transact Trust Undermined
Then fear hits, and it comes down very sharply. When I started to look at that.
ALAN GREENSPAN

Come Down Fear Hit Look Sharply Start That
If we allow terrorism to undermine our freedom of action, we could reverse at least part of the palpable gains achieved by postwar globalization. It is incumbent upon us not to allow that to happen.
ALAN GREENSPAN

Action Allow Freedom Terrorism Undermine
Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this.
ALAN GREENSPAN

Amount Available Cash Necessary Problem Should Solve Stress
Excessive optimism sows the seeds of its own reversal.
ALAN GREENSPAN

Excessive Optimism Retrospect Something
American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.
ALAN GREENSPAN

Alternative Belief Consumer Country Great Lender might Mortgage Product Provide Traditional
You can’t have the capitalist system if an increasing number of people think it is unjust.
ALAN GREENSPAN

Capitalist Increase Number People System Unjust
If we are to remain preeminent in transforming knowledge into economic value, America’s system of higher education must remain the world’s leader in generating scientific and technological breakthrough, and in meeting the challenge to educate workers.
ALAN GREENSPAN

Economic Knowledge Preeminent Remain Transform Value
At the risk of some oversimplification, if the skill composition of our work force meshed fully with the needs of our increasingly complex capital-stock, wage-skill differentials would be stable.
ALAN GREENSPAN

Capital Composition Force Meshed Need Oversimplification Risk Skill Stock Work
If we are dealing with psychology, then the thermometers one uses to measure it have an effect.
ALAN GREENSPAN

Deal Effect Measure Psychology Thermometer Use
But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
ALAN GREENSPAN

Country Decade Escalate Irrational Past Subject

I’m a better economist than I was a sax player.

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I’m a better economist than I was a sax player.

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