Greenspan to Walk Tightrope

Bonds sold off a bit and the yield on the 10-year Treasury note rose from 4.36% to 4.45%. Greenspan prompted the weakness when he dismissed worries from the spring that deflation might force the Fed to take dramatic action, even by entering the market to buy Treasuries.

"Concerns about the remote possibility of deflation that had been critical in the deliberations of the Federal Open Market Committee last year can now be safely set aside," he said.

It was hardly a huge move, however. The 9-basis-point increase seen last July is exactly the average change in the 10-year's yield on the first day of Greenspan's congressional testimony over the past five years, according to research by Lehman Brothers.

Perhaps this year, Greenspan will revisit his predictions that the dollar can safely lose value, the real estate market can safely decelerate and the trade deficit can safely shrink. But it's not likely.

Instead, he will, like the villain of Measure for Measure, Angelo, seek to avoid the worst consequences. First condemned to the chopping block, he is pardoned in the end.