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What Greenspan says, what journalists hear, often diverge


When Federal Reserve Board Chairman Alan Greenspan speaks, the world -- especially the world of business journalists -- listens.

So when the Fed chairman spoke Tuesday, everyone was listening but seemed to hear very different things.

Mr. Greenspan, who spoke in Washington and New York, hinted he was leaning toward lowering interest rates or leaning toward not lowering interest rates or not leaning either way, according to accounts in major newspapers yesterday.

The bottom line?

All of the newspaper accounts were, well, sort of wrong, said Ross DeVol, a senior economist at the Wefa Group, a Bala Cynwyd, Pa., economic forecasting firm.

The Fed chairman really said none of the above, according to Mr. DeVol.

What really occurred Tuesday was a clash of Fed culture with journalism culture.

"Greenspan's comments are very vague, and that's what he gets paid to do," Mr. DeVol said.

Journalists, on the other hand, get paid to write about specifics, to dig through the haze and tell readers what is happening, he said.

The New York Times and the Washington Post were probably most off base in reporting the chairman's remarks, Mr. DeVol said.

The Times' story -- which also was published in The Sun yesterday -- said Mr. Greenspan was reluctant to cut interest rates. The Post said Mr. Greenspan hinted he might cut rates.

The Wall Street Journal was perhaps most on the money, reporting that Mr. Greenspan gave no indication of which way he was leaning.

But the Journal erred, too, in Mr. DeVol's opinion, by devoting too much attention to the question of whether rates would be cut in July.

What Mr. Greenspan really did, Mr. DeVol said, "is publicly recognize that the probability of a recession today is substantially above what it was four or five months ago."

What that means for interest rates is not very conclusive because any economic downturn may be slight and might not even require an interest-rate cut, Mr. DeVol said.

Mr. Greenspan may have known exactly what his ambiguity was doing.

"If I say something which you understand fully in this regard," he told a senator Tuesday, "I probably made a mistake."

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