Nobody can argue that Alan Greenspan, the recently retired head of the US Federal Reserve was anything but good news for those working on Wall Street.
The main reason was the ‘Greenspan Put’ a theoretical put option that meant that whatever happened in the markets the Fed would step and manage prices, normally by slashing rates and injecting liquidity. So every massive trade that was transacted had a free put option attached, you knew that the downside was protected
But Greenspan has gone. So the job of maintaining the put seems to have gone to the ex Goldman head Hank Paulson, the market-wise Treasury Secretary.
Read this Daily Telegraph article for an insight into how the markets will be handled should all hell break out on the downside.
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