Financial 411: High Finance and High Fashion

Positive industrial production numbers helped lift spirits across stock markets today. The Dow gained 46 points to close at 10,573. The S&P 500 and Nasdaq also had gains.

Alan Greenspan Talks Economics

The former head of the Federal Reserve, Alan Greenspan, has come out in favor of raising taxes. Speaking at the Council on Foreign Relations to an audience of business leaders, which included former executives of investment banks Lehman Brothers and Bear Stearns, Greenspan said Congress should not extend President George W. Bush's tax cuts. "We should not have tax cuts with borrowed money," he said.

Greenspan says the government needs to bring the deficit down before giving money back to taxpayers. The tax cuts will expire at the end of this year, unless they're renewed, and President Barack Obama wants to extend them only for households with income less than $250,000 a year. Republican leaders want to keep the tax cuts for everyone. WNYC's Lisa Chow was at the speech.

Is Alan Greenspan changing his tune here?

Yes, he is, but I think he would say that times have changed. He supported the tax cuts back in 2001, and at that time the U.S. was looking at surpluses. Today, the U.S. is looking at huge deficits. He basically said, raising taxes in a weak economy does have risks, but that the U.S. really just can't afford to give money back to taxpayers right now. It needs to cut its spending and it needs to cut the deficit. He basically said there's a relationship between big deficits and lower private investment. And that if we don't get rid of this deficit we're never going to see a recovery in the economy.

Now, I understand Greenspan also said the federal stimulus has really fallen short of expectations.

Yes, he did say that. He basically said the first bailout — the one that helped the banks, called TARP — was important to stabilizing the economy. But the second bailout, or stimulus, as we've called it, which was passed under President Obama, hasn't been, and I quote him, "it hasn't been a very useful endeavor." He says it just hasn't produced the results that we all wanted, and at this point, Greenspan said, we'd probably be better off by doing less than doing more.

Fashion Week Wraps Up in NYC

Switching gear now from high finance to high fashion -- New York fashion week wraps up tomorrow. The extravaganza will have lured an estimated 100,000 guests, and it has corporate sponsorships from Mercedes Benz to Fiji Water. But what kind of business happens actually there? WNYC's Ilya Marritz has been finding out.

If I may be so blunt, what is the point of Fashion Week?

Wouldn't you like to know. Runway shows originated as a way for designers to show their work to buyers, back in the 19th century. And for all the celebrities and hubbub about who sits where that we hear about in the gossip pages today, that kernel of purpose has never really disappeared. It's buyer meet seller -- think of it as the world's fanciest trade show. And as a perk for New York City, the city says that spring and fall Fashion Week together generate $770 million of local economic activity as well.

You spent an afternoon with a senior figure from Saks Fifth Avenue, the high-end department store. What did you learn?

I followed Colleen Sherin, she is the women's ready-to-wear fashion director at Saks Fifth Avenue. You can kind of think of her as a tastemaker for the store, with one finger in advertising, one finger in promotions, and also in buying. And we went to three different shows over one afternoon. Just to zoom in on one of the shows we saw — this was Donna Karan — I sat near her and kind of watched as she jotted down notes as all the models came down the runway. After the show was over, and the crowd started to disperse, Colleen Sherin stayed there, she hung around and had a long conversation with two reps from Donna Karan, and she told them that Saks was interested in possibly getting exclusive rights for one of the looks for an ad campaign.

And did they make a deal?

Not exactly. The runway show is kind of a teaser, a Kabuki act if you like. Nobody usually writes checks or inks deals right then and there. That can happen later in corporate offices or studio visits.

Well, then why have fashion shows, if the real business happens somewhere else, behind closed doors?

Many people have questioned the efficacy of this model, particularly as it starts to tilt more toward promotions rather than sort of a business-to-business merchandising type of situation. Colleen Sherin, from Saks, told me for her, there's no substitute for spending 12 hours a day, for eight days straight, literally, at a new appointment every hour.

"It's a great way to see a lot in a very condensed period of time," she said. "And I do think that it helps you to quickly assess and develop the trends."

And by the way, she also told me the trends this year are going to be low hemlines and what fashion people call wearability. As I understand that, that means clothes that you don't need to be a model to wear.