Greenspan Testimony–A “Certain Pause”

Reuters reporter Andrea Hopkins in her report on Greenspan’s March 2 testimony (9th paragraph):

Still, Greenspan said the fact that such a plan (for Social Security private accounts) could lead to government involvement in financial markets gave him “certain pause.”

Greenspan’s full testimony is here. The word “pause” does not appear, let alone “certain pause.”

Further, Greenspan did not discuss anywhere in his speech what Ms. Hopkins referred to as “government involvement in financial markets.” A complete reading of the testimony shows NO occurrences of “involvement,” NO occurrences of “financial,” no occurrences of “market” or “markets.” There are two occurrences of “stock,” but only as “capital stock” (which is either the nation’s total wealth or savings reserves), and in both cases he was clearly NOT referring to the financial markets.

Finally, private accounts by definition DON’T represent government involvement. Individuals make choices as to what to with their money within the range of options allowed. As I understand it, the proposals, when they appear, will allow individuals to choose among 6-8 different index mutual funds. It would have made no sense for Greenspan to make an association between goverment involvement in the markets and individual Social Security accounts.

So……Did Andrea Hopkins just make it up?

UPDATE: In a call to Reuters this evening, the polite woman I spoke with thought that perhaps Mr. Greenspan might have strayed from his prepared remarks, or that Ms. Hopkins was referring to Greenspan’s responses to questions from the committee. I don’t think The Fed Chairman takes questions (WRONG–See Update 2), but this will all have to wait until Thursday.

UPDATE 2: The Reuters person I spoke to stated that Greespan’s “certain pause” was in a response to a Congressman’s question about whether picking a trustee for the Social Security investments was tantamount to government involvement in the markets. Since there is no proposal formally on the table yet, Greenspan said that issues like this would give him a “certain pause.”

Two points:
- IF, IF the proposals involve index funds as the only investment alternatives, my point that the government would NOT be involved in the markets stands. But Greenspan, who is IMHO being a bit disingenuous here, is correct in having a degree of anxiety if this ends up NOT being the case, because unscrupulous financial planners might put their clients into ill-advised investments.
- Ms. Hopkins gave no indication that Mr. Greenspan’s “certain pause” statement was not in his prepared remarks, or that it was in response to a question, and IMHO she should have.