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The Greenspan legacy

MORE than ten years have elapsed since Alan Greenspan stepped down from the Federal Reserve; a decade that has not been kind to his reputation. Having just read Sebastian Mallaby’s comprehensive biography*, “The Man Who Knew”, it struck me that his career was a classic example of cognitive dissonance. (Read Martin Wolf’s review of the book here.)

The main post-crisis criticism of Mr Greenspan was that he was a naive believer in market efficiency, failing to pop bubbles in the late 1990s or mid-2000s and failing to regulate the financial sector properly. He was, for a while, a disciple of the libertarian novelist, Ayn Rand. But Mr Mallaby shows that things were rather more complex than that characterisation suggests.

In a paper written back in 1959, for example, Mr Greenspan clearly seemed to understand the detrimental effect that bubbles could have. He wrote that

The higher the stock market gets at its peak and hence the greater decline required to return to “normal”, the deeper the decline in economic…Continue reading Click Here For Original Source Of The Article

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GIANT, cross-border mergers in Europe have been rare in recent years. Deals fail to happen even when mid-sized companies—such as family-owned and run specialist manufacturers in northern Italy or the Mittelstand in Germany—have the chance to gain global heft. For that blame founding owner-managers, many of whom are reluctant to lose control of treasured companies. Blame too an artisanal culture, particularly in southern Europe, in which firms’ owners say they are content to remain small and relatively obscure. Occasionally, too, nationalist politicians block efforts by perfidious foreigners to snaffle prized local brands.

Now, though, one of the largest-ever mergers in Europe actually looks set to go ahead. Luxottica, an Italian maker of fancy specs that was founded in 1961—it owns brands such as Ray Ban and Oakley—is to merge with Essilor, a spiffy French producer of lenses. The joint entity is set to combine Italian style with deft French engineering. The deal is supposed to be completed by the end of the year, creating a new entity with a market value of €46bn ($49bn), 140,000 staff and annual revenues of €15bn. It will be...Continue reading

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