Philzone.org Discussion Board: Archive 2004: Politics Archive 2004: Greenspan in Financial Times

So Greenspan was quoted in the financial times on the front page with a warning about the US economy.
Here's part of the article:
http://news.ft.com/cms/s/ec1452b4-3a3d-11d9-aa4d-00000e2511c8.html

Can any PZ economists help me with how to understand some of his statements I read in the printed version?

"Mr. Greenspan was unequivocal about world interest rates, saying rises 'have been advertised for so long in so many places that anyone who has not appropriately hedged his position by now is obviously desirous of losing money'"

Whaa? Anybody know how to hedge your position?

>>Whaa? Anybody know how to hedge your position?


…a cynic might suggest...

Hold a senior executive position, board seat or
investment position with any large energy, oil,
or construction company (or defense industry
leader)...

*and*

start a war with Iraq.

hedge your position means:

1) don't borrow using an ARM (adjustable rate mortgage), because your payments will start going WAY up.

2) if you have an adjustable rate mortgage, convert it to a fixed rate as fast as you can.

3) If you own a lot of bonds, think about selling some of the longer-maturity ones.

4) own cash, because the return on lending short-term will go up (e.g. money market accounts). Of course, since Bush & Greenspan want to devalue the dollar, that means your welath will shrink compared to the french, for example. Bush hates the french so much he wants to make them wealthy.

But it is unclear what a safe haven other than cash would look like with rapidly increasing rates:

1) bad for bonds.
2) bad usually for stocks.
3) not good for real estate.
4) the return on gold tends to really suck over time, but it is safe.

Maybe a decent idea is a world money market fund, earning Euro interest on Euro accounts, for example.

Wow . . . thanks for the info

I almost think I understand now.