The MSM roundup. First up, the observation that long-term interest rates sure look awfully low, from Reuters:
In a stark warning to bond investors that the market may be overpriced, Federal Reserve Chairman Alan Greenspan said on Wednesday he was just as puzzled as everyone else about why long-term interest rates have remained low.
"For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum," Greenspan told the Senate Banking Committee.
"It does appear that Mr. Greenspan thinks long rates should be higher than they currently are. And that is a warning to bond investors," said Joel Naroff, president of Naroff Economic Advisors.
Alan Ruskin, research director at 4CAST Ltd in New York, agreed.
"There is some hint that perhaps the bond market has got it wrong and yields shouldn't be this low. It is certainly bearish for the bond market," Ruskin said.
And from CBS MarketWatch, an interpretation that the northward march of the federal funds rate is not ready to pause:
"Today's comments prove that Fed is committed to gradually ushering in an era of higher rates, as the economy grows," said William Hummer, chief economist at Wayne Hummer Investments in Chicago.
Hummer expects Greenspan's affirmation of Fed policy to result in the yield curve returning to "normal" over the next few months as medium and long-term rates firm in response.
And this on social security, from the New York Times -- noted by William Polley, as well -- with something for everyone to really like or really not to like, depending on where you stand on the whole privatization thing:
The Federal Reserve's chairman, Alan Greenspan, said today that he favored private accounts within Social Security, a pillar of President Bush's plan to revamp the retirement system. But Mr. Greenspan also signaled that he wanted to change Social Security slowly.
"If you're going to move to private accounts, which I approve of, I think you have to do it in a cautious, gradual way," Mr. Greenspan said in an appearance before the Senate Banking, Housing and Urban Affairs Committee. He expressed concerns about the transition costs and borrowing that would be required to overhaul Social Security and he did not rule out the possibility of raising payroll taxes, an idea the president has rejected....
Mr. Greenspan agreed with President Bush that Social Security, if not necessarily in crisis, faced significant problems, and that they should be addressed sooner rather than later.
"Beyond the near term, benefits promised to a burgeoning retirement-age population under mandatory entitlement programs, most notably Social Security and Medicare, threaten to strain the resources of the working-age population in the years ahead," Mr. Greenspan said in his opening remarks. "Real progress on these issues will unavoidably entail many difficult choices."
"But the demographics are inexorable, and call for action before the leading edge of baby boomer retirement becomes evident in 2008," he added.
At one point, Mr. Greenspan used language similar to what Mr. Bush has been saying of late: "It is risky doing nothing."