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Alan Greenspan Quotes about Risk

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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

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
Business, Years, Risk
"Alan Greenspan: The Oracle Or The Master Of Disaster?" by Thomas B. Edsall, www.huffingtonpost.com. March 22, 2009.

Indeed, better risk management may be the only truly necessary element of success in banking.

Alan Greenspan
Risk, Banking, Elements

No matter how skillful the trading scheme, over the long haul, abnormal returns are sustained only through abnormal exposure to risk.

Alan Greenspan
Long, Risk, Abnormal

I believe that the general growth in large [financial] institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically -- I should say, fully -- hedged.

Alan Greenspan
Believe, Risk, Growth
"Taking Hard New Look at a Greenspan Legacy" by Peter S. Goodman, www.nytimes.com. October 8, 2008.

Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. 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
Past, Japan, Risk
Alan Greenspan's speech at the Annual Dinner and Francis Boyer Lecture of The American Enterprise Institute for Public Policy Research in Washington, D.C., www.federalreserve.gov. December 5, 1996.

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... Derivatives have permitted the unbundling of financial risks.

Alan Greenspan
Keys, Risk, Resilience
Alan Greenspan's address to the Federal Reserve Bank of Chicago's Forty-first Annual Conference on Bank Structure in Chicago, Illinois, www.federalreserve.gov. May 5, 2005.

History has not dealt kindly with the aftermath of protracted periods of low risk premiums.

Alan Greenspan
Risk, Aftermath, Economy
Alan Greenspan (2008). “The Age of Turbulence: Adventures in a New World”, p.796, Penguin UK

At the risk of some oversimplification, if the skill composition of our work force meshed fully with the needs of our increasingly complex capital-stock, wage-skill differentials would be stable, and the percentage changes in wage rates would be the same for all job grades.

Alan Greenspan
Jobs, Skills, Risk

Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices, ... This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.

Alan Greenspan
Risk, Aftermath, Debt
"Greenspan Chides Investors". Speech at a Fed symposium, www.nytimes.com. August 27, 2005.

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