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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

Derivatives have permitted the unbundling of financial risks.
ALAN GREENSPAN

Derivative Financial Permit Risk Unbound
All taxes are a drag on economic growth. It’s only a question of degree.
ALAN GREENSPAN

Degree Drag Economic Growth Only Question Tax
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
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
The gut-feel of the 55-year old trader is more important than the mathematical elegance of the 25-year old genius.
ALAN GREENSPAN

Elegance Feel Generation Gut Important Mathematical More Old Trader Year
The free lunch has still to be invented.
ALAN GREENSPAN

Free Invent Lunch Still
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
Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity are in a state of shocked disbelief.
ALAN GREENSPAN

Disbelief Institution Interest Lend Self Shareholder Shock
Such caution seems especially warranted with regard to the sharp rise in equity prices during the past two years. These gains have obviously raised questions of sustainability.
ALAN GREENSPAN

Caution During Especially Past Price Regard Rise Sharp Two Warranted Year
Protectionism will do little to create jobs and if foreigners retaliate, we will surely lose jobs.
ALAN GREENSPAN

Create Foreigner Job Little Lose Protectionism Retaliate Surely
It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating.
ALAN GREENSPAN

Anything Deteriorate Escape Fiat Money Perceive Seem
In an economy that already has lost some momentum, one must remain alert to the possibility that greater caution and weakening asset values in financial markets could signal or precipitate an excessive softening in household and business spending.
ALAN GREENSPAN

Already Asset Business Caution Economy Great Lost Momentum Must Possibly Predictable Remain Spend Weakness
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

Asset Escalate Exuberance Irrational Unduly Value
I must say, I never expected to see the day where I would be talking about anything other than reducing the debt, I’m running into the tyranny of zero, which is where you can’t reduce (the debt) any more
ALAN GREENSPAN

Anything Day Expect Must Reduce Say Talk
And she always has so much fun doing it. We make a good team.
ALAN GREENSPAN

Always Do Make Fun Good Much Team
When trust is lost, a nation’s ability to transact business is palpably undermined.
ALAN GREENSPAN

Ability Business Loss Nation Palpably Transact Trust Undermined

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?

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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?

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