Uncle Alan Greenspan’s reputation is taking on water at about the same rate as the economy, which is to say, about as fast as the Titanic, and Alan’s bailing away with a bucket at the Wall Street Journal claiming that he didn’t know, couldn’t have known that his decisions weren’t just wonderful. Now normally I wouldn’t bother kicking a man who’s down on his knees begging for undeserved redemption, but the problem with Greenspan is that if he makes it off his knees so might his policies and ideas—policies and ideas which, in fact, have almost everything to do with where the US economy finds itself today.
Greenspan’s deliberate obtuseness is understandable. He’s 82 years old, his entire life was in the service of certain Randian ideas, and he wants to believe that his practical application of those ideas to real policy was the right thing to do. I would too because in the cyclopean fall of America’s economy, Greenspan looks back and sees a life that spread ruin in the service of ideas which may well turn out to have lead to a replay of the 1920s, the scenario every Fed chairman strives to avoid.
The beauty of Greenpsan, the sick turpitude of it, is that he knew most of what he was doing. Take this passage:
The prevailing view among critics faults Mr. Greenspan on two main counts.
First, they say, his Fed lowered rates too much from 2001 to 2003 to cushion the economy from the bursting dotcom bubble. Then it took too long to raise them again. Low rates fueled mortgage borrowing, driving home prices to unsustainable heights…
…At the time, Mr. Greenspan expected his policy to boost housing because the rest of the economy was relatively unresponsive to lower interest rates. Based on decades of his own research, he believed a buoyant housing market would spur consumers to borrow against home values and spend more. This would not produce a housing bubble, he predicted, because it was difficult to speculate in homes and the memory of the 2000 tech-stock bust remained fresh.
What Uncle Alan is saying here is that he knew that people would boost consumer spending by borrowing against the value of their houses. He wanted consumer spending to be bouyed up, not by real earnings increases, but by consumer debt against their major asset class. So the credit lines which have caused so much hardship amongst Americans were specifically what he wanted. As for his claim that he didn’t expect a bubble, well, perhaps he didn’t. But many of us did, at the time, and predicted it at the time, including myself. It was predictable, because it was predicted. And in fact, even Greenspan doesn’t really believe that he didn’t expect a bubble…
Mr. Greenspan now admits he was wrong about the improbability of a housing bubble. Yet he has long maintained that bubbles are an unavoidable feature of a dynamic economy. He pulls out a 1999 speech and shows, underlined in green marker, passages in which he warned of recurring but unpredictable patterns of overconfidence followed by investor panic. He does not share some foreign central bankers’ belief that their job is to defend against excessive asset-price inflation: No sensible policy, he maintains, could have prevented the housing bubble.
Greenspan knew that a bubble was possible. More than that he specifically did not believe that it was his job to stop asset price inflation. A housing bubble, or a stock market, is asset price inflation. Greenspan’s attitude reminds me of an arsonist saying "I just spread the gasoline around, and if a spark lands on it, well, it’s not my job to put it out. These things happen!" Greenspan poured the fuel on the ground in terms of generational low interest rates and left it there as long as possible. When it ignited, he first claimed that fires are a good thing, "hey they keep you warm" then said "well, it’s not my job to put this out" and now he says "gee, who could have known. I mean fires happen, but they’re so unpredictable!"
And Greenspan had ideological reasons for wanting to make mortgages as cheap as possible:
Mr. Greenspan generically defends the Fed’s action, writing: “I believed then, as now, that the benefits of broadened home ownership are worth the risk. Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.”
Greenspan also largely sidesteps the larger issue of regulation, falling back on a weak claim of deferring to the bank’s staff. As one of the most adulated people in the US during the 90’s and early 2000’s Greenspan was in a position to push, and push hard, but such evidence as there is indicates not only that he did no such thing, but in fact that the Randian preferred self-regulation to tight federal oversight. This history is long, and isn’t a matter of a single episode as the WSJ claims, but of repeated deregulation supported by Uncle Alan. Seeking Alpha lists some highlights:
In January 1989, the Fed Board approves an application by J.P. Morgan, Chase Manhattan, Bankers Trust, and Citicorp to expand the Glass-Steagall loophole.
In 1990, J.P. Morgan becomes the first bank to receive permission from the Federal Reserve to underwrite securities.
In 1991, the Bush administration puts forward a repeal proposal, winning support of both the House and Senate Banking Committees, but the House again defeats the bill in a full vote.
In December 1996, with the support of Chairman Alan Greenspan, the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25 percent of their business in securities underwriting.
In August 1997, the Fed eliminates many restrictions imposed on "Section 20 subsidiaries" by the 1987 and 1989 orders. The Board states that the risks of underwriting had proven to be "manageable," and says banks would have the right to acquire securities firms outright.
In 1997, Bankers Trust (now owned by Deutsche Bank) buys the investment bank Alex. Brown & Co., becoming the first U.S. bank to acquire a securities firm.
All of this was to eventually result in the final, wholesale repeal of Glass-Steagall, an appeal which Greenspan favored and which if he had spoken out against it, would probably not have happened. The current financial crisis due to exotic derivatives and over-leverage (Bear Sterns was leveraged at over 30/1) would probably not have occurred if Glass-Steagall had still existed in its full and unadulterated original form.
And, as the WSJ itself admits:
In 2000, then-Fed governor Edward Gramlich, who was in charge of the Fed’s consumer affairs, proposed to Mr. Greenspan that the Fed’s staff examiners look for abusive lending practices in banks’ lightly regulated mortgage affiliates.
In an interview with The Wall Street Journal last June, three months before his death, Mr. Gramlich said that at the time, he generally considered subprime loans a good thing. He didn’t then know the extent to which the loans would become a problem, but he wanted the "Fed to be a leader" in cracking down on predatory lending.
Mr. Greenspan recalls that he demurred, saying that the Fed shouldn’t have oversight of these lenders. Shady operations could portray their Fed-regulated status as a seal of approval, he suggested, giving them unearned credibility with customers.
When given a chance to regulate, Greenspan refused. He has almost always refused, because he is a disciple of Ayn Rand and he believes that markets discipline themselves.
That belief is why Greenspan refused to take asset bubbles seriously, allowing both the stock market bubble and the housing bubble to develop under his watch. In his view it was not his job to stop such things, no matter how much harm they might do. His belief that such bubbles are necessary in a dynamic economy we can dismiss with derision. Was the economy of the 50’s and 60’s, which didn’t have such bubbles, worse than that of the last thirty years, which did? Certainly not for ordinary Americans, it wasn’t. Dynamic appears to mean "the rich were getting filthy rich, and normal people were taking on debt" to Uncle Alan.
Greenspan’s an old man, past his days of power, trying to make his life look like one which did more good than harm. The sad truth, however, is that his Randian beliefs directly lead him to not just ignore, but to help ignite two asset bubbles which did great harm to Americans. He methodically and deliberately helped remove the regulatory framework which might have prevented this most recent bubble from bursting in as damaging a way as it has. And this is even before we discuss, for example, his responsibility for shilling for George W. Bush’s tax cuts for America’s rich, causing the US to suffer massive government deficits or the changes he made to social security in the eighties which put more of the tax burden on the poor and middle class.
Greenspan lived his life in service to the idea that markets operated best that were most lightly regulated. His reputation will mirror how much currency that idea has going forward. For the sake of sane economic policies, let us hope that Greenspan’s rehabilitation of his reputation falls as flat as the housing bubble he helped create.
Further Reading
Seeking Alpha’s Timeline of Deregulation
No, Greenspan Doesn’t Get To Rehabilitate His Reputation
Related posts:
- FDL Book Salon Welcomes Barry Ritholtz – Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy
- Putting America Back to Work: What a Principled Government Would Do
- John Kenneth Galbraith: The Great Crash 2008
- The Consumer Financial Protection Agency: A Small Victory for the Good Guys
- Who Benefits from Financial Innovation? Not You, Silly Taxpayer





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Zed!
Thank you. If I never hear the phrase “no one could have predicted …” again it will be too soon.
I don’t expect every high government official to predict every single thing. But just because you failed to predict something doesn’t mean it couldn’t be predicted.
Who was Herbert Hoover’s Fed Chair? Greenspan is competing to take his place.
*spew* damnit, where is my towel?
“No one could have predicted…” has become the Bush Administration’s (and Greenspan’s) epitaph specifically because every time they say it, not only are they lying, but they’re talking about events that actually were predicted.
Greenspan believes in the market until the market needs help. Rob/Tax/devalue the poor people’s Dollar to help the Rich he’s the anti Robin Hood with Bush doing quite well playing evil out of touch King John. To bad there is no Richard the Lionhearted around.
Markets do self-regulate, thru bubbles & crashes!
Ian Welsh:
Wonderful, long post, with good links.
This is just loopy and radical, simplistic ideology unmoored from any notions of pragmatism:
It’s ironic he says this when right wingers are always explaining the “subprime” mess as some kind of left wing scheme to get undeserving classes of people cheap houses. They’re so fucking muddled and self-contradictory.
and…
All this wouldn’t be nearly as devastating to American home buyers, especially racial minorities, had the low interest rates on their mortgages remained fixed at those low percentage rates.
Thank you Ian. I always enjoy your posts, sad and scary as they may be.
“No one could have predicted”
Its like that line in the movie the “Princess Bride” where the Sicilian keeps trying to trap the hero the hero gets away and the Sicilian says inconceivable so often the Spanish Swordsman asks the Sicilian if that words means what he thinks it means.
I think Greenspan, Bush, Condi and the Neocons need a Dictionary.
Last I looked, homeownership went from 65% at end of Clinton to 69% at its peak and has now retraced to 67%. So this whole mess looks to have raised homeownship by 2 percentage points at most (since further retracement is possible).
The republicans rabid hatred of the success of FDR and the “New Deal” has been evident since Roosevelt began his reforms following his election. The scope of the changes including both versions of Glass-Steagall has eaten like a cancer in a most fundamental way ever since.
Without the regulation provided by Glass-Steagall the unregulated markets have been aligning for a crash of biblical proportions since the genesis of “Market Based” regulation in the 80’s with the repeal of Regulation Q with St. Ronnie. All the B.S. about “market forces” being superior to regulation should never get the creedence they were once afforded, and if we have another crash like 1929 again, they probably won’t. But that’s a hell of a price to pay for experimenting with a “solution” when the answer existed and was in the books. But that’s the basis of modern conservatism… The Government can never do anything correctly.
Thank goodness all the proposals to “fix” social security went nowhere. Can you imagine now if Bear Stearns owned/managed your Social Security Account? Pass the compazine.
oh I don’t know. How does one apportion blame between a maliciously negligent captain (shrub) and his economy’s skipper? It took more than one great white hope to sink this ship.
Ian -
My hat off to you for connecting Greenspan with his Randian cult, the Objectivist. He will go down espousing this shallow drivel. It is adolescent at best.
My true confession is when I was very young I too was taken with Atlas Shrugged so I joined the Objectivist in my search and attended meetings run by Nathaniel Brandon, the boy wonder Ayn Rand in late middle age seduced though he was married to Barbara, the golden girl.
What would you like to know? Like so many things for me, the more Brandon and Rand’s followers spoke the more they self-revealed and I left in total disgust. However, for years I kept the gold chain with the giant gold dollar sign to hang around my nect, kept in an envelope. It was their response to the Star of David, Cross and any other religious symbols. Why? Because they, too, were a religion and they worshipped the dollar.
Bet Greenspan wore his under his shirt at every Report of the Economy. I lost a lot of respect for Bill Clinton when he kept Greenspan. Bill is smart except when he is really stupid.
An important thing to know about the Objectivist is that they can do no wrong. They don’t err. They are the elite. At this point in Greenspan’s life he could never look at the emptiness of his beliefs and the terrible damage done to so many people. After all, the Objectivist laughts at morals. It is beneath them.
where’s live blogging on the Senate hearings?
thanks
BTW, on November 13, 1998, I wrote a piece titled “Beginning the Next Bubble.” That was in the middle of the LTCM fiasco, when most other forecasters thought that the resultant stock market debacle (stemming from margin calls, meaning good stocks had to be sold to cover margins) meant that the economy was weak (dropping exports to Asian Tigers related). I knew that the economy was strong-weakness in exports to Tigers would be more than offset by higher consumer spending, related to good growth in employment and one of the few occassions since the 1960s when real wages were growing. So Fed’s lowering interest rates would all go into a renewed stock market bubble. Since Greenspan was on my mailing list (and actually sent me a minor correction once, so I have reason to believe he read my work), he certainly knew that someone make a solid case for the next leg of the stock market bubble.
I remember that Greenspan was hesitant to go along with Shrubs first $400 tax refund. He was not keen on it at first and then he flipped and went along with the program. Put some lipstick on him. He’s an old whore.
Excellent Analysis! Greenspan has been an enabler of speculation. We can know thank him for transferring this over to the commodities markets. He just considers this all adding necessary liquidity to the market. Nice to know your life savings is just necessary liquidity for a few high rollers.
OMG, had no idea Randian cultists actually had jewelry symbols. But guess I’m not surprised.
An important thing to know about the Objectivist is that they can do no wrong. They don’t err. They are the elite. At this point in Greenspan’s life he could never look at the emptiness of his beliefs and the terrible damage done to so many people. After all, the Objectivist laughts at morals. It is beneath them.
They sound like Neocons arev they related?
We’re certainly finding that out now, in more ways than one it seems. Hubris is his worstest enemy.
I think the Repugs have always been outraged and angry that FDR was so successful and solved a problem they just couldn’t (and still can’t). Envy and jealousy has eaten them up until they are small minded sour little meanies lashing out at anyone who is vulnerable.
Not to mention he had lots of help from one Senator Phil Gramm who by the way is John McCain ’s big advisor on the economic matters. Lord save us please!
“Why? Because they, too, were a religion and they worshiped the dollar.”
now, suffer the consequences of their sins…….
Has Uncle Allen shared how he feels about the transfer of risk/liability to we the people while the profits are privitized? Just asking. Haven’t seen his comment yet. Although I suspect his Mrs. won’t run out of 40 year old single malt any time soon.
Thanks for a great post, Ian.
if greenspan really wants to make peace with himself before he moves forward he must say that his policies created what we have to day;
a rober baron economy where the smallest percentage possible enjoy the fruits of an entire nation
People have been doing that for years. What did he think was driving up prices to those levels? Did he never hear of ‘flipping’ and REITs? Does he ever leave his nice little bubble of unreality?
However, for years I kept the gold chain with the giant gold dollar sign to hang around my nect, kept in an envelope. It was their response to the Star of David, Cross and any other religious symbols.
Worshiping Moloch!
But G.W is Born again Pagan’s need not apply
I always amazes and amuses me when the “best and the brightest” discover that they are not gods, and that history does have a way of repeating itself. Their egos know no bounds. They think that this time history will stand still and let their brilliance shine for all eternity.
My biggest concern is where are we going to find the source for the inevitable correction? Who is the next Keynes?
More than that, he was a class traitor to them.
Excellect article, Ian. It seems that Mr. Greenspan has virtually become his own parody.
Greenspin.
OT
Boxer need a new hair colorist.
I often wonder whether anyone has told the Randians that those books are, you know, fiction? That they’re devoting their lives to trying to convince the rest of us to make the world more like a, um, NOVEL?
“now, suffer the consequences of their sins……”
Our sins. We all enjoyed the ride, so we’re all at fault here.. some more than others, admittedly, but unless you count among the poor and dispossessed victims of these venal old men, you were part of it. Our children will burn us in effigy… if they could only afford the effigy.
Paul Krugman? Having him as head of the Fed would make me feel better but I’m not so sure about bankers and hedgefundies.
At least he’s in good health and able to see experience the consequences of his actions and inactions. Bush expects that the effects of his great decisions won’t be appreciated for decades (if ever).
Sheesh, tell that to the Scientologists, they’re in that status too… it’s like they’re all big kids playing dungeon and dragons, star wars, and star trek but with the financial markets as their realms.
The Petraeus-Crocker story is based on a series of lies:
That al Qaeda in Iraq is the same as al Qaeda in Pakistan.
That al Qaeda in Iraq seriously threatened to take over Iraq
That the surge was responsible for the decrease in violence instead of
1. Buying off the Sunni tribal leaders
2. Sadr declaring a truce
3. The success of ethnic cleansing
4. The move away from large scale sweeps by US forces
That troops will be drawn down although troops levels will be higher after the surge
That the Badr Brigades have been “integrated” into the Iraqi Army and haven’t just switched uniforms not allegiances
That the Iraqi army performed well in Basra even though it got its ass kicked there
That the surge was a blazing success but all of its gains are fragile and reversible
That everything in Iraq is the fault of:
1. al Qaeda in Iraq
2. Iran
3. Sadr
4. Maliki
That it is never the fault of
1. Petraeus
2. Crocker
3. Bush
4. Cheney
5. The Republicans
6. The neocons
Krugman’s things is international… he’s not a financial economist
Ian said:
The Chicago Fed was right there making excuses with him
Two years ago I was telling people that a bubble was coming. I said, keep your money to yourself until it passes. I said because they’re talking about it and making excuses already, means they know it can get pretty bad
And it is.
When I walk or ride bike to the grocery store or Home Depot about a quarter or half a mile away, every week there are more and more “For Sale” signs, and more importantly – “Bank Owned, For Sale” signs. Depending on which way I go there are between 5 and 7 and that’s not counting the ones where people have moved out and they haven’t put the signs up yet.
Heh. You know that I devoured a couple of Rand books with enthusiasm when I was in high school, but I grew up. I actually tried to reread one a couple of years ago, and could’t get beyond 10 pages, it was such drivel. I also watched when CSPAN did a long special on Rand, and treated her as though she actually had anything to say.
What are the banks going to do with all those homes they now own? I read that in the next 12 to 18 months 200,000 jobs will be lost in the banking industry. That’s really going to help the unemployment rate /s
Not to brag or anything, but I couldn’t get through 10 pages of Ayn Rand when I was in high school.
badly
she’s a pretty woman, imho, and that detail distracts from the whole
“We all enjoyed the ride, so we’re all at fault here.”
I’ve enjoyed no ride, ever… Everyday is a battle…..
Thats 200,000 GOP votes going Dem!
“What are the banks going to do with all those homes they now own?”
Always wanted that downtown condo….
Well, shame on you. You weren’t young even once. *g*
Put up a name we need SOMEONE to replace Helicopter Ben!
Krugman is an Economics Professor at Princeton…!
Voinovich just said “I hate to agree with Sentor Feingold.”
The banks don’t own those homes. The banks only promised the notes were good paper. The notes were bundled and sold. The banks are now on the hook for the value without holding the asset. That is the real problem. They are facing insolvency.
All of them are now headless chickens in the “Asset, Asset, whose got an Asset” game
That is a great question, and one that the idiots in charge of the economy should be addressing. I suspect that if any candidate came out and said that the first thing they’d do is reform banking and bankruptcy laws to allow homeowners to not lose their homes, they’d be picking up votes from worried consumers. Of course, any of them will say that, but whoever can make a convincing argument for a mechanism to put such legislation in place would do well.
The “free-market” republicans, bushdogs and other recalcitrant idiot would have to be politically neutralized first, but effective use of the 100-day bully pulpit might do it.
Thousands of empty homes and unemployed folks will do no one any good… a homeowner who gets to keep his home (with some payments being made) and a potential for one day getting back up and running is worth more (seems to me) than an empty decaying property that might never be resold.
But then I’m just a DFH with an MBA, so what do I know?
Boy Voinovich just let loose with a huge wad of frustration.
i know that, he’s not a financial economist though … his thing is international …
Stuart Greenbaum
thank you Ian
yep, pissed…..
Link? I’ll read it later got go
But then I’m just a DFH with an MBA, so what do I know?
Thank you. Made my afternoon bearable.
frustration by design…
http://www.olin.wustl.edu/facu…..=greenbaum
http://news-info.wustl.edu/sb/page/normal/38.html
She called herself a philosopher though she had not one original idea. Even better she called herself an Aristotelian. I tried to re-read her also and it was so painful. From every perspective her works are bad novels – poor character develpment (mostly all two dimensional), inconsistent and poorly developed plot, lengthy preaching, broad sweeping statements on “truths”, and just very bad writing (lacks style and depth).
I would not recommend it to high school students. Instead, I’d highly recommend To Kill a Mockingbird.
the money has been “sucked” out of the system…….
Obama’s up.
Obi’s up!
We get bubbles every 5-10 years. They can be seen clearly at least 3 years before they burst and experts can probably see them 5 years out. Whenever a Greenspan or pundit says no one could have predicted they are either stupid, lying, or both.
That’s my reality!
He’s grayer than when he started his campaign. I THOUGHT so, but couldn’t tell really from the speeches. Bless him.
Yes, it was the shallowness that got to me, the black & whiteness. Once you stop identifying with that way of looking at the world, you can’t bear to spend any time in it again.
http://www.federalreserve.gov/…..ishkin.htm
mishkin would be okay also…
actually the president of the ny fed is okay too …
I’m grayer than when the campaign started,too and may be completely bald by the time it’s over. :)
Land assemby
There’s a nice, public policy face to this process, a speculative face, and a creepy face. All of them come with longer time horizons than the banks who are going to be choking on REO soon (unless someone decides that the homeowners are the ones to get the bailout). Long horizon eventually buys.
thankful for the day!
gigggggle
yeah, there is that.
and me too, but I’m a blond, so it doesn’t show so much.
hehehe
that was RICHE~!
Yeah, he’s up for re-election.
I did call his office to say thank you to him for expressing it, though.
Obama’s coxing them into definitions that fit his plans for drawing down influence in a nuanced “unBushlike” way.
Up for election explains it.
Holy crap… you do learn something new every day. The references to Randian philosophy led me to Wikipedia, which led me to this:
(emphasis mine)
Damn. Who knew that American Monetary policy would ever be influenced by an author of crappy fiction beloved by wingnuts?
it went with smoking dope and playing jazz
Greenspan personal involvement with Randian philosophoney is fairly widely known. Welcome to the in group.
Respectfully, not many thought her fiction was crappy. But I do get your point.
Obama’s close is strong and reasonable. He lays out that we don’t have the resources to stay in Iraq and asks if something less than a perfect solution would be acceptable for Iraq. Crocker basically says no we will need to stay into the indefinite future.
Short Crocker (and also long Crocker): This is hard and this is complicated.
Reminds me of when W said that the war in Iraq was hard work, about 5 times in one appearance.
Actually I thought his performance lacked just about everything. Didn’t get any new info out of P&C, didn’t make any new points, and his close was wordy and wandering.
I read most of Rand’s works during the 70’s. I came away with the feeling that her main characters were totally self-serving with little regard for anyone who might impede their progress to control whatever it was they wanted to control. Money was god. I currently know a lady who worships Rand and her ideas. She could play Dagne Taggart with no problem. To Ellen, the working class exists solely to be exploited by the rich. Not a pleasant person to spend time with. My ex, who turned me on to Rand, is not much different. Not a dis, just fact.
Crocker needs to be asked if he is willing to stay into the indefinite future. I think not.
i went thru a highschool thing with rand also … i still have all her paperbacks in my library and my oldest daughter read them also … however, both of us recovered pretty quickly
I will never deliberately put myself in the position of defending Greenspan. Especially concerning the ill advised deregulation efforts.
But I am curious about the interplay of monetary and fiscal policy in the Bush II years. I think to some extent, the impprovised serial bubble management was monetary policy’s necessary path, a way of managing the problems of extremely inneficient fiscal mismanagement of initially very mild late 2000-2001 slowdown the produced the very slow and prolonged jobless recovery.
And when I mean inefficient, I do mean inefficient -some economists have calculated that the Feds spent approximately $1 excess fiscal spending for every $1 lost in intitial recession, and the result was not much of anything at all. And long run Bush II fisal policies were actually counterproductive. So the monetary authroities had to work against very inefficient short run and counterproductive long run fiscal nonsense. There were several macro scares during that time, including a short deflation-liquidity trap scenario that seemed to be unfolding.
Does Ian Welsh have any thoughts on that issue?
Yep, Obama asked the question of the day and Crocker tried to sidestep it … Biden said that in the second round, Crocker will have to answer the question …
Except for the stay in Iraq forever part. That seems to be pretty simple for him.
Randian economics is very weird and illogical. I had hoped Greenspan had left it behind. I wonder if he is still a goldbug after all these years.
What is there an ‘um…. er’ count for Crocker in his testimony this time?
after about two years of undergraduate economics, i completely left all randian delusions behind, i keep wondering why he continued…
Scratch that, I’m wrong.
He’s up in 2010.
The two paperbacks I have were published in 1961. Loose glue on bindings, yellow fragile paper (printed in the days when acid was used).
his reputation is in ths shitter for posterity…..that is all MAESTRO of Merde….yea i coined it
I knew he was a “fan”, but not that he was a close personal friend at that level. Okay so now batshit-crazy makes way more sense.
Acid?
In the sixties?
No way man!
Lol
Sorta like the “Left Behind” series? Which have become, far as I can tell, unofficial addenda to the Old Testament for the fundies.
I agree that his questioning wasn’t strong except at the end. I guess I liked his performance overall because he brought up a point I wanted addressed. We don’t have the resources to stay in Iraq. This means that Petraeus has got to stop treating the US Army has his own personal toy. It means too we have to leave and under less than optimal conditions and maybe under some pretty bad ones. But that’s the reality. Petraeus and Crocker are too much in Cloud Cuckooland to address these fundamental realities. They prefer to ignore them. I am just glad that someone asked anyway.
I actually think that the Fed has no choice but to pursue bubble policy, otherwise the economy fails. (Except for what I talked about in 17, when lower interest rates were not needed at all.) There is no structural oomph for the economy, which would normally come from employment & real wage growth. So have to keep consumer spending going thru borrowing. But asset prices are more influenced by lower rates than is consumer spending.
An architect I know who knew that crowd told me that Greenspan was one of Rand’s many lovers.
you know, i hate to sound like a classical economist, but there is a natural path to recovery from recessions. I frankly think that there were in no way the kind of recessionary pressures then that required THAT steep of an interest rate cut. I felt it was much more political than anything else. The timing of the cuts was suspiciously close to the beginning of the Bush re-election. Besides, there was PLENTY of fiscal stimulus with a budding war and all those tax cuts. Historically, even the unemployment rate at that point was relatively low. All they really had to do was extend unemployment benefits a bit. It was an average economy not a damaged one …
Not that kind of acid! *g*
yes, it is very strange, and very untethered to reality even compared to libertarian stuff based on maniacally pursued ultar-neoclassical reasoning. I meant werid and illogical from viewpoint of ’splaining stuff like the real world. From a moral viewpoint it is very tight logical solipsisttic hermetically sealed little system; but it makes me gag is the main problem I have with that part.
At least you got out. Believe me, your life will be much more rewarding and adventurous away from these stunted people. Oops. Sorry. You did say one was your eX. Didn’t mean to offend. Just out of curiosity, did either of these ladies ever live in a village in another country (Laos, Equador, Napal, etc.)?
blegh !
That sounds familiar, so I may have heard that so time ago.
Does anyone ever link this “staying in Iraq for evah” to the bases we are building there? Do we know who will populate said bases?
Sheeeet. I’ve been fightin’ these pols for so long mine’s white.
Pardon me while I worship the Porcelain Deity, Ralph
well, it’s all based on those of us that can actually read the John Galt speech all the way through will just be cheered on by the idiots that can’t but recognize our innate intelligence and benevolence …
just an hypothesis though …
Cary Grant did use acid but I don’t know how it affected his books.
Hey, now. Watch it.
Obama was strong and to the point. Wouldn’t let them steamroll him. I like that. He looks really confident. It’s amazing how the trail can toughen you up.
you’re the number cruncher, so I assume your models must’ve been showing much worse numbers than maybe I saw, but I was working for the Fed at the time (atlanta) and maybe it was because I was down here in the sunbelt, but our numbers were not really gloomy
There was some reference this morning to turning the bases over to Iraq. I’ll believe that when I see it. We’ll never do that. We’ve never done it anywhere else, and something going on in Korea, where we want to charge them billions for building another base away from the DMZ. The U.S. will never give up a base as long as it is an empire (getting kicked out, like whatever Stan that was, excepted).
Why hasn’t it toughened McCain ? *g*
(uh, did I mention I was a jazz pianist as well as an economist? and I’ll just leave the other implications to your imagination ;-) )
For obvious reasons Sen. Obama has a fine line to walk.
If his questioning was too aggressive, he would’ve been seen as posturing for the cameras.
What episode are you referring to?
Yeah, reading between the line in that Wikipedia piece I sort of came away with that impression. So now our collective nuts are in an economic vise because his might have once been in her hand. The mind boggles.
I agree, except that the plenty of short run fiscal stimulus was very inefficient, and conterbalanced by long run fiscal policy that worked against a good recovery. I am not up to date enough on macro policy to know, so I have to admit a good old fashioned neo-Keynesian belief that proper fiscal monetary mix is needed to recover from a recession, especially one preceded by a financial bubble burst.
Well, Clinton trod the line nicely by pointing out something that no one else did, namely that the U.S. has now assumed military repsonsibilty for So. Iraq, something we had not done before.
post 9-11
that could be just the ting to make me swear off sex forever..
I don’t think it will be by our broken Army. The Administration, i.e. Bush and Cheney, Petraeus and Crocker want to stay forever but we don’t have the resources. They will build and in several cases have built the bases but we will leave in the next Administration and the Iraqis will strip them down to the wiring and plumbing in the walls.
The fundamental problems with the economy are structural, namely Mafia of the Intelligentsia keeping medical costs ballooning, and lack of labor power means household income growth is anemic at best. Neither fiscal nor monetary policy can address those issues, thus the increasinly weirder cycles we get by using inappropriate tools to goose the economy.
Dementia doesn’t work that way.
Hope is not a plan.
I’m glad to hear our hard earned tax money will be put to some good use after all ;)
Not strictly true. We have given up bases (notably in the Philippines (Clark and Subic) and in Europe, I think). Some of it was due to BRAC, some due to local politics and volcanoes. I don’t see Korean or Japanese bases going away anytime soon… too much of a buffer against the Chinese/North K’s in the same way they were in the Cold War against the Soviets.
I was retired by 9/11 so I wasn’t pushing numbers. Bad policy made under those circumstances is completely forgiveable, IMO. But keeping rates down too long and not raising them soon enough is much more open to criticism. But then, as I said in 130, neither monetary nor fiscal tools are the appropriate ones to address the fundamental problems of the economy.
well, the problem was the tax cuts were not directed at short term stimulus, even though they were sold that way. you’re not going to get a good aggregate demand push from giving capital gains cuts to rich people. Investment is still all caught up in animistic spirts and positive net present value projects. They needed to cut taxes to young and folks with higher MPCs. NOT the rich and OLD. Also, this war spending is weirdness … we’re spending all the cash in theatre and not as much over here … if it was done right, rather than the usual bush/cheney ineptitude, there would have been few problems
wow, you get a big AMEN from this corner for that…
And then there’s those other 699 bases.
When I was in Poland in 2000, we drove by a base that had been built by the Soviets. My cousin said: The Russians left and the Americans moved in. Turns out, I found out in 2007, it was one of the bases used for secret renditions.
Somehow, whenever Andrea Mitchell is quizzing surrogates for Obama, Clinton, and even McCain on the economy and the actions of the Federal Reserve, I always miss the part where she says “full disclosure: my husband is trying desperately to rehabilitate his image as the past head of the FR, and to ensure the continued presence of Republicans in the White House and Congress.”
Maybe I’ll catch that disclaimer tomorrow.
Another side effect of this whole sorry mess, and the elephant in the room that the republicans are loathe to mention is the shitty performance of the USDollar overseas. I have heard that small currency exchange vendors in Europe are becoming loathe to even accept USD, prefering Euros instead.
That shit worries me, because there are some long-term implications that will prove more than just moderately disasterous for the country as a whole. No matter what your political affiliation once the dollar isn’t worth shit, you get hurt.
We neoclassical econmists do not do ‘distribution’ because the math theory isn’t pretty enough and does not produce ‘theoreoms.’ So, while what you say may be true in the real world, that is an ugly special case not worthy of serious consideration.
Actually, snark aside, I agree with you to some extent. But my point was bad fiscal policy turned what would have been an mild recession with an blow average recovery due to distributional problems, into a mild recession with a lousy recovery with monetary policy that set up as many problems for future as it solved.
Petraeus keeps saying how great the Senate was for getting MRAPs out to the troops. Biden pushed hard for that but the truth is MRAPs were held up for a long time because of inertia and mistakes in the Pentagon bureaucracy.
I agree that the “fiscal stimulus” had characteristics that made it less stimultive than a similar dollar amount might have been.
No insult, but “neoclassical economist” is not a flattering tag, IMO.
Well, it’s been real folks, i have to go hold office hours and do a monetary theory seminar tonight (timeliness is next to buddhaliness)
thx, Ian for the great post!
Actually, while I was in Nam I flew the wife over to Japan and she lived on the economy for the next 3 years. She says she hated it but she learned to speak Japanese, made friends with some of the neighbors (we watched the first moon walk on the colour TV of one of them) and seemed to embrace the culture. It was only upon returning to the US that she said she didn’t like it. I even flew her mother to Hong Kong from San Diego so she could enjoy it with us. We brought back a ton of jade and ivory. After the divorce she went to my place one Sunday when I had the duty and took all the jade I had and most of the ivory. Said she wanted it and couldn’t stand my having it. I was glad to get out of that as cheaply as I did.
My dad was a jazz pianist.
What branch? Navy? Only guessing because “had the duty” is a uniquely Navy/Marine Corps phrase…
Navy, 1961-1975.
Ah, thought so. Designator?
Yeah, around that time Stirling and I (on the Atlantic’s old forums) were talking about Alan bailing out the Naz bubble. Ah well.
Greenspan supported Bush’s fiscal policies, so he can’t claim “oh horrors, we had to work against bad fiscal policy”. But actually Treasury and the Fed worked very closely together to push money where they wanted it — remember the removal of the 30 year long bond at exactly the time when a rational treasury department should have been flipping everything in sight over into long bonds (heck they should have started selling 50 year bonds).
good points. Thanks for jogging my memory. I always discounted Greenspan’s testimony on fiscal matters approximately 100% becuause I figured ‘he doesn’t know much about it, and what he thinks he knows is goofy.”
But I keep forgetting that he had bogus public credibility as the universal expert aon macro-everything. And he did push, explicitly or implicitly for Bush II fiscal policies, even if he tries to deny it now.
Guess I asked a dumb question, in some respects.
Keep interests rates low enough long enough with no restrictions on lending or borrowing, and you will get a lotta wild leveraging.
Heckuva job, Greenie!
More than that, he’s saying that if there’s no support for property rights based on broad ownership at (artificially) low prices by the mass of people, they might wake up and find that the whole property rights thing is a big scam. If you go back to pre-Europeans-in-America times, you will find that individual property rights didn’t exist, and that they were therefore invented/imported by the Europeans. See: http://www.answers.com/topic/native-american
Epu but oh well …
Some words he wrote in 1966
(commenting on the Great Depression):
“The excess credit the Fed pumped into the economy spilled over into the stock market — triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too little too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed.”
Now, if he understood that then, you think he forgot it ‘now’?
“No one could have predicted … ” ? Randian?
Easy Al wasn’t a fool — he was a tool and achieved the desired results.