European Tribune - Community, Politics & Progress.

Fuck You: Translating Greenspan's hackiness

by Jerome a Paris
Wed Aug 6th, 2008 at 08:01:21 AM EST

Alan Greenspan, the man who has done more than anybody - even including the Bush administration - to impoverish the middle classes for the profit of the ultra-rich, has been given yet another tribune in a Serious Business Newspaper (in this case, the Financial Times of London) to try to provide justification for his past hackdom. That one is particularly rich in jargon, so I thought it would be worth doing a full translation and commentary.

Follow me below the fold.

In blockquotes: the actual text
In italics: the translation in normal language of his words
In normal: my comments.

Front-paged by afew

Repel the calls to contain competitive markets
By Alan Greenspan
The surprise of recent months is not that global economic growth is slowing, but that there is any growth at all. The credit crunch of the past year has not followed the path of recent economically debilitating episodes characterised by a temporary freezing up of liquidity - 1982, 1989, 1997-8 come to mind. This crisis is different - a once or twice a century event deeply rooted in fears of insolvency of major financial institutions.

This is not a small crisis like you've known in your lifetimes, this is a real, class-A "oh shit" crisis.

No kidding, Bubbles. But don't worry, we'll have negative growth yet, once we've stopped massaging statistics after a Democrat has been elected.

This crisis was not brought to closure by the world's central banks' injection of huge doses of short-term liquidity. Only when sovereign credits were substituted for private bank credit, first in the case of the UK (Northern Rock) and subsequently in the case of the US (Bear Stearns), was a semblance of stability restored to markets. But the London Interbank Offered Rate spreads on overnight index swaps and credit default swaps of financial institutions have not returned to the modest pre-crisis levels. Fears of insolvency have not, as yet, been fully set aside. There may be numbers of banks and other financial institutions that, at the edge of defaulting, will end up being bailed out by governments.

Banks are fucked. We've already used a hell of lot of taxpayer money (and government credibility) to save the first two casualties, but that was not enough and now there's a lot more to come, and little we can do.

No shit, Bubbles. We've used public money to save private speculators ("sovereign credits were substituted for private bank credit"), and Wall Street is happy that this has created the nice precedent for the rest of them when needed. And yet, they worry about it ( a simple explanation of this goes as follows: bankers look at their books, say "oh shit, what a load of crap", then go on to think "our colleagues must be in an even worse shape, I just know i have not been as reckless as them" and conclude, logically, that other banks' balance sheets are full of crap and should not be lent to under any circumstances. Thus the credit crunch: banks now keep for themselves whatever fresh cash they have, after having spent years literally throwing money (courtesy of Bubbles Greenspan) at clients.

The insolvency crisis will come to an end only as home prices in the US begin to stabilise and clarify the level of equity in homes, the ultimate collateral support for much of the financial world's mortgage-backed securities.

Banks can only be save when the real estate crisis is over.

However, US home prices will stabilise only when the absorption of the huge excess of single-family vacant homes that emerged as the US housing boom peaked in 2006 is much further advanced than it is now. New single-family home completions are currently barely under the rate of home demand generated by household formation and replacement needs. Only later this year will the current suppressed level of housing starts be reflected in completion levels consistent with a rapid rate of liquidation of the inventory glut, and this, of course, assumes that current levels of demand for housing hold up.

We're still building almost as many homes as are being bought, so the crisis can come to a head only when construction crashes enough for the houses already on sale to be bought by new buyers coming on the market.

The real estate market crisis is really, really bad and is no closer to being solved.

Pending that outcome, the price of equities worldwide will determine whether the international financial system can maintain a modicum of stability as it eases out of its credit crunch, or falls back into another period of angst and turmoil.

If stockmarkets fall too, we're truly fucked; if they don't, we still have a chance to survive.

The optimistic case rests on the business world beyond finance. Given this past year's vast impairment of financial intermediation, nonfinancial corporate business has held up surprisingly well, contributing to a flow of corporate earnings that has helped sustain a stressed global stock market. To be sure, global stock prices are off a fifth from their October 2007 peaks, but still hover at levels last seen in 2006, a demonstrably less fear-ridden period than currently prevails.

Despite banks fucking everything, for some reason other corporations are not yet fucked and are still making money.

See: everything's alright. The Dow Jones is not down yet!

A sustained level of global equity prices will be critical if banks are to recapitalise themselves at the higher levels daunted investors now require. The pool of capital is being augmented by a reasonably high level of saving (nearly 24 per cent of world gross domestic product), up significantly from earlier this decade. The flow of new saving will provide some support.

The Chinese save a lot of their money, and will need to park it somewhere. Thus equities might yet survive.

Yeah, thank God for these silly suckers buying our dollars and our increasingly worthless T-bills.

Capital gains, however, are just as important. This can best be observed in the context of the consolidated balance sheet of the world economy. All debt and derivative claims offset in global accounting, leaving real physical and intellectual assets and their market value reflected as net worth. Capital gains cannot finance new physical investment, but do add to global net worth. If, for whatever reason, discounting of prospective future earnings engendered by the world's physical capital stock declines, the market value of that capital stock rises with no offsetting liability. There is accordingly a larger value of equity shoring up the capital of financial or nonfinancial businesses. Should that discount rate reverse, the value of world equity will fall. Consequently, lower global stock prices could impede the recapitalisation of banks and other financial institutions. Debt issuance would also be suppressed as it leverages off the level of equity.

If there is little inflation, today's assets generate value in the future which is worth more today. So lower inflation means higher stock market values. Inflation is BAD.

I bet you did not get that message from that paragraph... but hey, he's a central banker. In other words: we have to protect the assets of the very rich, otherwise things will be really, really bad.

Globalisation is at the root of the past decade's unprecedented surge in world economic activity. The growth in the volume of global trade has far exceeded the pace of world real GDP growth for decades. Between 2001 and 2007 global cross-border investments (at market values) rose almost two-thirds faster than world nominal GDP, according to data from the International Monetary Fund.

Hey, that paragraph is understandable as such. Amazing! Globalisation is great!

The economic edifice - market capitalism - that has fostered this expansion is now being pilloried for the pause and partial retrenchment. The cause of our economic despair, however, is human nature's propensity to sway from fear to euphoria and back, a condition that no economic paradigm has proved capable of suppressing without severe hardship. Regulation, the alleged effective solution to today's crisis, has never been able to eliminate history's crises.

Capitalism is to be credited with the boom, but the bust is due to human nature - NOT to capitalism.

hmmm... yeah right.

A financial crisis is heralded, in fact defined, by sharp discontinuities of asset prices. The crisis must thus be unanticipated. The fact that risk was heavily underpriced for much of this decade was broadly recognised in the financial community, but the timing of the sharp price correction was nonetheless a surprise.

We all knew it was a bubble. We were just hoping that it would last enough not to burst on our watch. No way were we going to talk about it before it did burst!

After years of denying that it was a bubble, we've had more than a little bit of that revisionist discourse that says that "everybody" just knew it was a bubble even though "nobody" could have predicted (except for those that, you know, actually did). Now the discourse is slightly more subtle: it was known, but there was little to do about it.

The underlying theme is: "Don't blame us for the bubble. Bubbles happen, nothing we can do about human nature."

Nothing could be further from the truth. That bubble was deliberately engineered through lower interest rates, compounded by tax cuts for the rich, and fed by a 30-year ideological drive to make money and greed the ultimate arbiters of everything in our societies.

Never forget: all of this was NOT inevitable: it was a political choice, endorsed by too many for too long.

Recent history is replete with such underpricing persisting for years. Those market players who withdraw from "long" commitments at the first sign of an excess of exuberance, risk losing market share. They thus continue "to dance" as Chuck Prince, the former Citigroup chairman put it, but always assume they will have time to exit the markets. The vast majority invariably fail.

It's VERY hard to predict the timing of a crash, so why bother - it's more fun, not to mention a lot more profitable, to join the fun while it lasts

As Keynes wrote almost a century ago: "markets are irrational longer than you are solvent", ie, you often go bankrupt betting against bubbles, even if you are right. Greenspan improves on that by saying that you might as well bet on the bubble.

Fires happen. It's okay to play with gasoline, it has no incidence on fires, they would have happened anyway.

When the current crisis emerged, it was assumed that the weak links would be unregulated hedge and private funds. The losses, however, have been predominately in the most heavily regulated institutions - banks.
We may not easily confront or accept the price dynamics of home and equity prices, but we can fend off cries of political despair which counsel the containment of competitive markets. It is essential that we do so. The remarkably strong performance of the world economy since the near universal adoption of market capitalism is testament to the benefits of increasing economic flexibility.

We can no longer deny the financial crisis, but we can still fight its inevitable political consequences by reminding people of what made the boom possible.

Yeah, let's forget about the bust.

It has become hard for democratic societies accustomed to prosperity to see it as anything other than the result of their deft political management. In reality, the past decade has seen mounting global forces (the international version of Adam Smith's invisible hand) quietly displacing government control of economic affairs.

The boom has only one cause, all over the world: less government.

Let's brazenly take all credit for the boom. Never mind that it was artificial.

Since early this decade, central banks have had to cede control of long-term interest rates to global market forces. Previously heavily controlled economies - such as China, Russia and India - have embraced competitive markets in lieu of bureaucratic edict.

Yeah. Even in China or Russia, it's "less government" that should be credited.

Never mind the scaremongering discourse you hear at the same time about government interference in private affairs by that evil Putin. The good things are thanks to less government, the bad things to more government. Simple really.

The danger is that some governments, bedevilled by emerging inflationary forces, will endeavour to reassert their grip on economic affairs. If that becomes widespread, globalisation could reverse - at awesome cost.

Don't forget: governements = bad

So, because of the bubble, things will crash, thus requiring governments to pick up the pieces (using taxpayer money). But because of that government intervention, the crisis will be blamed on government, and the Randians can selflessly go back to arguing that what we need is yet less government, to get another boom.

It's a simple philosophy: push for a boom-and-bust economy, call it inevitable, claim credit for the booms, blame evil government for the busts, say it loud enough that people have no idea it might be otherwise, rinse and repeat.

How do I say this? ALAN GREENSPAN IS A HACK.

He is an evil, partisan, hack.

He inflated the biggest bubble of all times, and he is the main driving cause of today's bust (also likely to be the biggest bust of all times). He is FULLY to blame for it, as is the ideology he has never abandoned or hidden: that of deregulation, greed, selfishness and the destruction and decredibilisation of government.

Republicans fuck up government. The main lesson should not be that govenrment can be fucked up. it is that you should not entrust government, a vital function in society, to Republicans. How hard is that to understand?

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Fuck You: Translating Greenspan's hackiness | 76 comments (76 topical, 0 editorial, 0 hidden)

Crossposted from DailyKos (4.00 / 8)

http://www.dailykos.com/storyonly/2008/8/5/16467/38070/329/563099

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Aug 5th, 2008 at 05:53:39 PM EST

Re: Crossposted from DailyKos (4.00 / 4)

It's all free, don'tcha know. Only in America could you have so much excess with so little responsibility.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Tue Aug 5th, 2008 at 09:38:29 PM EST
[ Parent ]

Re: Greenspan's service to Society (4.00 / 3)

European Tribune - Fuck You: Translating Greenspan's hackiness

He inflated the biggest bubble of all times, and he is the main driving cause of today's bust (also likely to be the biggest bust of all times). He is FULLY to blame for it, as is the ideology he has never abandoned or hidden: that of deregulation, greed, selfishness and the destruction and decredibilisation of government.

Since the advent of modern Central Banking in 1718 "Bubbles" have everywhere and always been caused by "fractional reserve" credit creation for the purpose of acquiring existing assets.

I think that Greenspan has done us all a service by fucking up the system , maybe 10 years before it would otherwise have happened.

Credit intermediation is finished, once and for all.

Thanks, Mr Greenspan!

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith

by ChrisCook (cojockathotmaildotcom) on Tue Aug 5th, 2008 at 07:18:38 PM EST

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

So tell us how you really feel, Jerome.

If there was any justice, well, it's no longer possible to say what should be the fate of Greenspan and his ilk.

I guess I may escape perdition if I remark that come the revolution, rich people will be taxed according to some reasonable utility function, intergenerational concentration of wealth will be prevented, nay rolled-back, sequestration of stolen wealth in corrupt postage-stamp pseudo-nations will cease, and very large packs of French Poodles will urinate constantly on Greenspan's otherwise-unmarked grave.

by PIGL on Tue Aug 5th, 2008 at 10:02:57 PM EST

Re: Fuck You: Translating Greenspan's hackiness (4.00 / 4)

I have thought that the highest and best use of US military and surveillance powers is to coordinate and execute combined actions on all regional "off shore banking havens." Cut the cables, jam the satellites, send in the marines and airborne and an army of IRS agents and bank examiners. Just from Bermuda to Panama we could probably "repatriate" enough wealth to pay for the current financial debacle and pay down much of the national debt. I would call that a return on investment for all of the money we have lavished on the military, etc.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Fri Aug 8th, 2008 at 07:43:33 PM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (4.00 / 3)

And even better, with the evidence seized in the off shore raids, we could start RICO proceedings and seize domestic assets. I wouldn't mind vacationing in Kennebunkport.

by rifek on Sun Aug 10th, 2008 at 02:15:29 PM EST
[ Parent ]

Re: Fuck You: Honors to the Honored, or not! (4.00 / 3)

MONDAY, APRIL 28, 2008 Barron's
FEATURES MAIN
Looking at Greenspan's Long-Lost Thesis
By JIM MCTAGUE | MORE ARTICLES BY AUTHOR
Barron's gets a rare glimpse at the Maestro's long-lost NYU doctoral thesis, and his long-ago view of, yes, a housing debacle.
WE'VE FOUND IT -- A COPY OF ALAN Greenspan's long-lost Ph.D. thesis! Or, more accurately, a rare copy of the elusive document, in Lassie-Come-Home-fashion, found us.
The dissertation, written in 1977 when Greenspan received his coveted degree from New York University, had been tucked away on a professor's sagging bookshelf for 31 years.
"There is no perpetual motion machine which generates an ever-rising path for the prices of homes," wrote Greenspan in his dissertation.
There are only two known copies: the Maestro's own and the one we viewed. As far as we can tell, Barron's is the only news organization ever to have seen the thesis since a third and now missing copy was removed from the public shelves of NYU's Bobst library at Greenspan's request in 1987, the year that Ronald Reagan appointed him chairman of the Federal Reserve Board. Glancing at the document, we momentarily felt like Indiana Jones at the dramatic moment in which he discovers the Lost Ark of the Covenant.
Greenspan purportedly was trying to deter news coverage of his personal life when he ordered the thesis into hiding. His anti-paparazzi subterfuge backfired: The stealth thesis became red meat for his critics, who smelled a cover-up. Magazine articles and a new book, Deception and Abuse at the Fed (reviewed here on March 31), have suggested that his degree was largely honorary and that the thesis was a cut-and-paste job, comprised of previously published, non-academic articles wrapped in a flimsy introduction.
Home > News & Commentary > This Week's Magazine > Features
MONDAY, APRIL 28, 2008
FEATURES MAIN
Looking at Greenspan's Long-Lost Thesis
By JIM MCTAGUE | MORE ARTICLES BY AUTHOR
Barron's gets a rare glimpse at the Maestro's long-lost NYU doctoral thesis, and his long-ago view of, yes, a housing debacle.
TEXT SIZE PRINT EMAIL DIGG SINGLE PAGE REPRINTS GET RSS Subscribe Now
With these readers:
Or copy the rss link:
WE'VE FOUND IT -- A COPY OF ALAN Greenspan's long-lost Ph.D. thesis! Or, more accurately, a rare copy of the elusive document, in Lassie-Come-Home-fashion, found us.
The dissertation, written in 1977 when Greenspan received his coveted degree from New York University, had been tucked away on a professor's sagging bookshelf for 31 years.
"There is no perpetual motion machine which generates an ever-rising path for the prices of homes," wrote Greenspan in his dissertation.
There are only two known copies: the Maestro's own and the one we viewed. As far as we can tell, Barron's is the only news organization ever to have seen the thesis since a third and now missing copy was removed from the public shelves of NYU's Bobst library at Greenspan's request in 1987, the year that Ronald Reagan appointed him chairman of the Federal Reserve Board. Glancing at the document, we momentarily felt like Indiana Jones at the dramatic moment in which he discovers the Lost Ark of the Covenant.
Greenspan purportedly was trying to deter news coverage of his personal life when he ordered the thesis into hiding. His anti-paparazzi subterfuge backfired: The stealth thesis became red meat for his critics, who smelled a cover-up. Magazine articles and a new book, Deception and Abuse at the Fed (reviewed here on March 31), have suggested that his degree was largely honorary and that the thesis was a cut-and-paste job, comprised of previously published, non-academic articles wrapped in a flimsy introduction.
TWO MAGAZINE ARTICLES IN THE late 1990s suggested that the thesis was entirely the work of Greenspan's staff at the Council of Economic Advisers, which he chaired from 1974-1977.
-skip-
We were tickled to find that the work's introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble. Writes Greenspan: "There is no perpetual motion machine which generates an ever-rising path for the prices of homes."
Greenspan, however, didn't foresee a housing mania spilling into the general economy, toppling banks and brokerage houses and paralyzing key portions of the credit system. The worst he could anticipate was that a sharp "break in prices of existing homes would pull down the prices of new homes to the level of construction costs or below, inducing a sharp contraction in building." Back then, there were no home-equity lines of credit, derivatives or subprime mortgages. Mortgages were largely concentrated at savings and loans. Credit was harder to come by, too, because conventional mortgage rates were about 8.5% and headed significantly higher. Still, the thesis shows that the former Fed boss was focused on housing very early in his career. Thus, it casts doubt on his recent assertions about being surprised by the Mesozoic-era-size impact of this decade's housing mania.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Tue Aug 5th, 2008 at 11:07:32 PM EST

Re: Fuck You: Honors to the Honored, or not! (none / 1)

Pardon the duplication of the first five paragraphs. The last three paragraphs are interesting.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Tue Aug 5th, 2008 at 11:11:28 PM EST
[ Parent ]

Re: Fuck You: Honors to the Honored, or not! (none / 0)

In other words, Greenspan was, at best, living decades in the past and thus unable to grok how a housing bubble could have farther-reaching consequences in today's economy.

I'm thinking mandatory retirement for Fed chairmen?

And, please, take Andrea Mitchell with you, Bubbles.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Wed Aug 6th, 2008 at 07:48:30 AM EST
[ Parent ]

Re: Fuck You: Honors to the Honored, or not! (4.00 / 3)

Drew

That is an extremely charitable interpretation which buys Greenspan's explanation of why his thesis should be removed from public view. Beyond the embarrassment of the fact that an academic credential was issued for what was, at best, little more than honorary reasons, his thesis clearly shows that he understood real estate bubbles. That would tend to show his professed inability to spot bubbles until they burst for the self-serving crap that it is. He is not one of the elite economists of this country or any other. He is one of the premier PR agents fronting for the gang who have been looting the country's wealth for 30 years.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Wed Aug 6th, 2008 at 10:34:35 AM EST
[ Parent ]

Re: Fuck You: Honors to the Honored, or not! (none / 0)

I agree, but it's customary in a debate to accept the most charitable interpretation of the other side's statements. Hence the "at best" in my comment.

I haven't read his dissertation. Don't need to. He could've rewritten The General Theory, and he'd still be an idiot. Generally speaking, the moment you hear that someone was buddy-buddy with the libertarian movement's ~~chief fascist skank~~ great literary icon, Ayn Rand, you can assume the person hasn't got a clue about economics.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Wed Aug 6th, 2008 at 12:44:00 PM EST
[ Parent ]

Re: Fuck You: Honors to the Honored, or not! (none / 1)

I should have acknowledged your "at best." This is an instance in which prosecutorial terms should apply, rather than debate terms, IMHO. I suspect you agree and lament with me the low probability of such action. Therefore it becomes a debate in the public square. When, recently, have the neo-cons and neo-classicals shown great regard for rules of debate?

I think that part of the problem with Obama is that he remains too high minded. Our opponents do not hesitate to throw dirt in the public's eye or our eyes, nor to grab a rock or a broken bottle and use them while those eyes are blinded. The intended audience, for better or worse, expects this and a refusal to employ such tactics in return results in being characterized as an "efite intellectual."

Any true thing that brings Greenspan and the beneficiaries of his actions low and results in his actions being seen for what they are is,IMHO, all to the good. But just getting 60 votes in the Democratic Senate Caucus and a Democrat in the White House will not be enough. Even should that happen, they will have to be convinced to redeem their souls and reform campaign finance in such a way that they are beholden to the voters, not to wealthy donors. Else there victory will only be a brief respite in the ongoing dissolution of the Constitution and popularly elected representative government.

Equally important is the discrediting of the motives and the ideology that has underpinned the entire neo-con movement since the late 60s. Given the inherently socially conservative mindset of so many US citizens that ideology, if not discredited, remains a ticking bomb awaiting the appropriate time to detonate for effect.

Electing Obama and more Democratic Senators is necessary, but far from sufficient.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Wed Aug 6th, 2008 at 01:53:31 PM EST
[ Parent ]

Re: Fuck You: Honors to the Honored, or not! (none / 1)

We are so on the same page on Rand. I generally refer to Objectivists (a Newspeak term if there ever was one; the "philosophy" is entirely subjective) as "Randonazis".

by rifek on Sun Aug 10th, 2008 at 02:24:54 PM EST
[ Parent ]

But he was one of the architects of the ... (4.00 / 2)

... removal of the firewalls from the system, exchanging a more resilient system for one with bigger booms.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Wed Aug 6th, 2008 at 01:22:25 PM EST
[ Parent ]

Wait! There's more. (4.00 / 3)

Morgan Stanley to Advise U.S. Department of the Treasury Regarding Fannie Mae and Freddie Mac
NEW YORK -- (Business Wire) --
Morgan Stanley (NYSE: MS) confirmed today that it has been retained by the United States Department of the Treasury to provide capital markets advice to support the Treasury's responsibilities associated with its new authorities regarding Fannie Mae and Freddie Mac. As part of that assignment, Morgan Stanley will support the Treasury's work to promote market stability and the availability of mortgage credit.
Morgan Stanley Chairman and Chief Executive Officer John J. Mack said, "Morgan Stanley is honored to have been asked to serve as financial advisor to the U.S. Treasury as it evaluates various alternatives for Fannie Mae and Freddie Mac. We are pleased to be able to offer our services to the government and look forward to working with Secretary Paulson and his team as they work to restore stability to the global capital markets and confidence in the U.S. housing market." Morgan Stanley will accept no fees for this assignment and will receive only $95,000 from the Government toward its expenses. (H/T Jesse)

And what are those "new authorities" .... BWAHAHAHAHAHAHAHA ... wait ... BWAHAHAHAHAHAHAHA ... who has read, even skimmed the table of contents, H.R. 3221 ENR ... BWAHAHAHAHAHAHAHA ... that's "enrolled as agreed to or passed", as in DONE, FIXED, by Both House and Senate?

Why, one of those would be Title 1, §1101, ESTABLISHMENT OF THE FEDERAL HOUSING FINANCE AGENCY, an investment bank whose sole purpose, apparently, is to underwrite MBS issued by old and new GSEs created by H.R.3221 et seq, not to mention the FRB's primary dealers ... BWAHAHAHAHAHAHAHA ...ahhhhaha "Blueprint for a Modernized Financial Regulatory Structure" indeed...

Diversity is the key to economic and political evolution.

by Cat on Wed Aug 6th, 2008 at 12:25:39 AM EST

Re: Wait! There's more. (4.00 / 2)

Then there is:
Section 1103...Federal Housing Finance oversight board, and:
Section 1105...Authority to Contract for Reviews of Regulated Entities.

Talk about foxes guarding henhouses! THIS FOX IS ON STEROIDS!

ARRRR! Mate. Time to rape and pillage.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Wed Aug 6th, 2008 at 10:56:05 AM EST
[ Parent ]

Draft LTE (4.00 / 5)

Dear Sirs,
Alan Greenspan ("Repel the calls to contain competitive markets", August 5) has changed tack once again to try to exonerate himself from his responsibility in the ongoing financial crisis. His current line: we all knew it was a bubble (something he denied at the time), but could do nothing about it, because booms and busts are inevitable and caused by human nature. This does not prevent him, oddly, from still claiming credit for his policies for the "boom" part of the cycle, by linking recent growth rates to deregulation and competition - and of course to push for yet more of the same today. Surely the economic benefits of such policies must be judged when taking into account the full cycle, including the bust, which has barely begun?
The economic history of the 20th century has been that of increasing prosperity brought about by governments slowly learning, from painful crises, how to better regulate the economy, and in particular the financial sector, to avoid the painful booms and busts of the past. It is quite amazing to see that the past 30 years of policy, whose main goal was to dismantle that painstakingly built regulatory edifice, and which predictably brought about the very kind of booms and busts that were prevalent in the past, can still be defended so earnestly today.

I'm travelling today, but expect to have internet access during theday, so comments most welcome.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 02:19:33 AM EST

Re: Draft LTE (none / 1)

"The economic history of the 20th century has been"

Make that "the past century" - we're not in the 20th C any more. Or say "The economic history of the 20th century was" ...

by Colman (colman at eurotrib.com) on Wed Aug 6th, 2008 at 02:46:37 AM EST
[ Parent ]

Re: Draft LTE (none / 1)

it's good, Jerome.

maybe insert the paras quoted by afew as a final coup de grace, as the time to be so polite is over, ~~especially~~ even for the FT.

if they feel you're ruffling too much feather, let them crop it.

i'm glad you can blog without such a governor here, for the sake of your blood pressure!

greenspan is a proto-orwellian creation, he gives new meaning to the verb 'toady'.

maestro? ... of mass financial destruction, through uber-mystification, linguistic loopholese.

still trying to sell us a car with no brakes.... we can go faster, whooo!

sure you and your rich buddies go faster... till you crash and burn through peoples' life-savings.

he's not totally stupid, so he's complicit up to his twinkly, kind, o-so-soulful, gentle beagle, mournful uncle eyes, making him a prime contender for the FAUSTian of the century prize, presently being shared by phony tony and (smell a bushrat) jo.

"Two wrongs don't make a right, but three lefts do." Jim Hightower

by melo (melometa4(at)gmail.com) on Wed Aug 6th, 2008 at 03:45:10 AM EST
[ Parent ]

Update (4.00 / 3)

Dear Sirs,
Alan Greenspan ("Repel the calls to contain competitive markets", August 5) has changed tack once again to try to exonerate himself from his responsibility in the ongoing financial crisis. His current line: we all knew it was a bubble (something he denied at the time), but could do nothing about it, because booms and busts are inevitable and caused by human nature. This does not prevent him, oddly, from still claiming credit for his policies for the "boom" part of the cycle, by linking recent growth rates to deregulation and competition - and of course to push for yet more of the same today. Surely the economic benefits of such policies must be judged when taking into account the full cycle, including the bust, which has barely begun?
The economic history of the 20th century was that of increasing prosperity brought about by governments slowly learning, from successive crises, how to better regulate the economy, and in particular the financial sector, to avoid the harmful booms and busts of the past. It is quite amazing to see that the past 30 years of policy, whose main goal was to dismantle that painstakingly built regulatory edifice, and which predictably brought about the very kind of booms and busts that were prevalent in the past, can still be defended so earnestly today.
In fact, the most recent bubble was deliberately engineered through lower interest rates and deregulation, compounded by tax cuts for the rich, and fed by a 30-year ideological drive to make money and greed the ultimate arbiters of everything in our societies. All of this was not inevitable: it was a political choice, endorsed by too many for too long, and Greenspan was one of its core architects.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 04:49:31 AM EST
[ Parent ]

Re: Update (4.00 / 2)

Good LTE.

Perhaps replace last 'core architects' with 'chief high priests'?

I think it could do with a final punchline. Perhaps something like

'If so many outsiders saw the crash coming, is it unfair to assume that Greenspan did too, especially given his history of contradictory prognostications during his time with the Federal Bank?'

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Aug 6th, 2008 at 06:57:11 AM EST
[ Parent ]

Re: Update (4.00 / 2)

I quite agree. There needs to be a good stab at the end. Mockery is an effective tool.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Wed Aug 6th, 2008 at 07:49:15 AM EST
[ Parent ]

How about? (4.00 / 3)

Dear Sirs,
Alan Greenspan ("Repel the calls to contain competitive markets", August 5) has changed tack once again to try to exonerate himself from his responsibility in the ongoing financial crisis. His current line: we all knew it was a bubble (something he denied at the time), but could do nothing about it, because booms and busts are inevitable and caused by human nature. This does not prevent him, oddly, from still claiming credit for his policies for the "boom" part of the cycle, by linking recent growth rates to deregulation and competition - and of course to push for yet more of the same today. Surely the economic benefits of such policies must be judged when taking into account the full cycle, including the bust, which has barely begun?
The economic history of the 20th century was that of increasing prosperity brought about by governments slowly learning, from successive crises, how to better regulate the economy, and in particular the financial sector, to avoid the harmful booms and busts of the past. It is quite amazing to see that the past 30 years of policy, whose main goal was to dismantle that painstakingly built regulatory edifice, and which predictably brought about the very kind of booms and busts that were prevalent in the past, can still be defended so earnestly today.
In fact, the most recent bubble was deliberately engineered through lower interest rates and deregulation, compounded by tax cuts for the rich, and fed by a 30-year ideological drive to make money and greed the ultimate arbiters of everything in our societies. All of this was not inevitable: it was a political choice. Greenspan, as one of the high priests of that economic church, owns that choice - and its consequences.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 08:19:05 AM EST
[ Parent ]

Re: How about? (4.00 / 2)

Looks good.

It would be good to include a more obvious implication that Greenspan lied to create the bubble and defended its growth knowing the likely consequences.

But that's an optional extra here - I think this does the job perfectly well.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Aug 6th, 2008 at 08:55:18 AM EST
[ Parent ]

Thanks for the assist (4.00 / 2)

Now sent as posted above.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 09:12:01 AM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (4.00 / 3)

The underlying theme is: "Don't blame us for the bubble. Bubbles happen, nothing we can do about human nature."
Nothing could be further from the truth. That bubble was deliberately engineered through lower interest rates, compounded by tax cuts for the rich, and fed by a 30-year ideological drive to make money and greed the ultimate arbiters of everything in our societies.
Never forget: all of this was NOT inevitable: it was a political choice, endorsed by too many for too long.

Right on. Core message.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Aug 6th, 2008 at 02:44:46 AM EST

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

I bet you did not get that message from that paragraph... but hey, he's a central banker. In other words: we have to protect the assets of the very rich, otherwise things will be really, really bad.

I got it...

...wondering aloud...Jérôme, you're not coming to some inflationary conclusions not entirely consistent with prior views, are you?

Mais c'est un scandâââle!!

by redstar on Wed Aug 6th, 2008 at 04:12:47 AM EST

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

Adding also, I'm still not convinced this isn't a mess mostly containable to the US, its EU tojan horses (UK + IRL) and one or two other real estate bubble economies...

Mais c'est un scandâââle!!

by redstar on Wed Aug 6th, 2008 at 04:34:06 AM EST
[ Parent ]

That, of course, depends heavily on ... (4.00 / 2)

... whether China can successfully sidestep the worst of the impact of the recession that will be coming to the US when the "other shoe drops" on housing ... that is, the second sharp downturn in construction activity implied by:

New single-family home completions are currently barely under the rate of home demand generated by household formation and replacement needs. Only later this year will the current suppressed level of housing starts be reflected in completion levels consistent with a rapid rate of liquidation of the inventory glut, and this, of course, assumes that current levels of demand for housing hold up.

"completion levels consistent with a rapid rate of liquidation", means "substantial drop in construction activity".

In an economy sputtering along at 1%-2%, with real income dropping for the majority of the population, and broad based unemployment at a raw 10.8% (10.3% seasonally corrected), a substantial drop in construction activity means only one thing.

Unless some new growth driver for the income/expenditure emerges between now and then.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Wed Aug 6th, 2008 at 01:29:42 PM EST
[ Parent ]

Re: That, of course, depends heavily on ... (none / 0)

Let's keep in mind that while the US is a major trading partner for the PRC, it is not the biggest. A chanllenging environment to be sure especially as regards the PBOC, but by no means a disaster announced in advance.

Mais c'est un scandâââle!!

by redstar on Thu Aug 7th, 2008 at 05:09:32 AM EST
[ Parent ]

Yes, a point I have made in the past. (none / 0)

That's why this:

whether China can successfully sidestep the worst of the impact of the recession that will be coming to the US

... is an open question, regarding having an effective strategy and implementing it successfully, rather than a question where the answer is known in advance.

The Chinese can weather an American recession. (17 Sept. 2007)

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Fri Aug 8th, 2008 at 01:05:46 PM EST
[ Parent ]

Not really (4.00 / 3)

I realised I forgot to add that he seems to mind only wage inflation, and not asset price inflation.

Both kinds are bad, but our current crop of central bankers only cares about one kind. And just to be clear: wage increases in line, or slightly above increases in productivity are NOT inflation.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 04:51:47 AM EST
[ Parent ]

Re: Not really (none / 1)

In this he is not alone but then, the role of a central banker has always been political. The "independant central banker" being beholden only to the political interests of Captial almost by definition, this bias shouldn't be at all surprising.

Mais c'est un scandâââle!!

by redstar on Wed Aug 6th, 2008 at 08:39:27 AM EST
[ Parent ]

Re: Not really (none / 0)

For the less astute among us:

"...wage increases in line, or slightly above increases in productivity are NOT inflation." as they increase domestic consumption and promote continued growth.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Wed Aug 6th, 2008 at 11:04:05 AM EST
[ Parent ]

Re: Not really (none / 0)

More to the point, they are not inflationary because they merely mean that the gains from the increase in productivity is split along the same ratio as the gains from the existing productivity.

(Has somebody around here already deconstructed "productivity" by the way? I've seen a lot of stuff in my short life that's been described as "productivity increases" when what was in fact going on could more accurately be described as "wage decreases" or "lower quality." But I won't bother with a deconstruction if someone else has already done one.)

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Aug 6th, 2008 at 11:50:05 AM EST
[ Parent ]

Re: Metaphysics of Productivity (none / 1)

JakeS:

Has somebody around here already deconstructed "productivity" by the way?

I'm sure Migeru would have the answer in his photographic memory....

FWIW my view is that the anthropocentric assumption that only "Labour" is "productive" - which underpins both conventional and Marxist economics - is complete and utter bollocks analogous to the Sun of Capital orbiting the Earth of Labour.

I bracket this assumption with other bollocks assumptions concerning "inflationary expectations"; homo economicus and all the rest.

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith

by ChrisCook (cojockathotmaildotcom) on Wed Aug 6th, 2008 at 12:16:55 PM EST
[ Parent ]

Re: Metaphysics of Productivity (4.00 / 2)

Actually, if you think the way the measure is used through, the underlying assumption is that only "Capital" is "productive."

by Metatone (metatone [a|t] gmail (dot) com) on Wed Aug 6th, 2008 at 01:43:29 PM EST
[ Parent ]

Re: Metaphysics of Productivity (none / 0)

The assumption is that the owners of the equipment own the equipment, hire labor and other variable factors and direct them in the use of the equipment, and the price of the product net of the cost of the variable factors per unit determine how much money is in the kitty to devote to maintaining the equipment and servicing any debt obligations, with any residual available as an economic profit.

So when obtaining new equipment, a principle concern will be the productivity of the variable inputs ... electricity, people, fabric, etc. ... when using the equipment. The higher the productivity the lower the cost per unit for given variable factor costs.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Wed Aug 6th, 2008 at 07:45:20 PM EST
[ Parent ]

Re: Metaphysics of Productivity (none / 0)

But that version of productivity takes into account only the items that have a direct impact on the bottom line. Externalities - such as cutting corners on safety, emitting noxious but unregulated pollutants, etc. - apparently do not go into productivity. Which makes "productivity increase" something of a misnomer when applied to a society as a whole, which frequently happens in public discourse.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Aug 7th, 2008 at 12:22:12 PM EST
[ Parent ]

Re: Metaphysics of Productivity (none / 0)

But that version of productivity takes into account only the items that have a direct impact on the bottom line.

But measuring what you have to measure to track the tug of war in the division of national income between labor and non-labor claimants on income is not responsible for that confusion.

Being externalities, the externalities do not play the same role in that tug of war over the money flows.

The responsibility for the abuse of the measure lies with those who abuse the measure. Some of the blame must go to traditional marginalist economists who persist in treating "real" GDP as if it was some underlying quantity rather than an artifact ... but even if the profession has clean hands, there would still be voices in the public discourse who would persist in misusing measures in pursuit of their own interests.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Thu Aug 7th, 2008 at 11:36:23 PM EST
[ Parent ]

Re: Metaphysics of Productivity (none / 0)

True, but then again that's also the case for such things as unemployment figures - they do say something meaningful; the meaningful things they say, however, are rarely the same as the things various political groups claim to think that they say.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Aug 8th, 2008 at 10:04:49 AM EST
[ Parent ]

Yes, but that's not a flaw in the measures ... (none / 1)

... the politicization of the measures will take place so long as the measures are produced ...

... but if the measures are not produced, then people will just make shit up.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Fri Aug 8th, 2008 at 10:30:12 AM EST
[ Parent ]

Re: Not really (none / 1)

With most wage earners barely getting by, few will be saving any portion of their earnings. They will spend all they get. Keynes understood that. That was the reasoning behind the stimulus. And at least as measured by our cooked econometric data, it worked to some extent.

Even if those wages were spent on cheap crap from China, it would increase sales at most of the store chains that are closing. Any consumption that does not get sucked into the black hole of finance would help. Finance and real estate are where almost all of the wealth destruction are occurring.

But what do I know? I am not an economist.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Wed Aug 6th, 2008 at 01:02:53 PM EST
[ Parent ]

Re: Not really (none / 1)

AFAIK we have often spoken of the need to take productivity apart, but I don't remember anyone doing so. If you feel so inclined, have a go.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Aug 6th, 2008 at 03:56:29 PM EST
[ Parent ]

There are two different productivities, though ... (4.00 / 3)

... the neoclassical concept of marginal productivity, and the macroeconomic concept of average labor productivity. The first is about production in a fictitious world where different types of variable inputs are primarily substitutes rather than being primarily complements, while the second is about the division of national income.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Wed Aug 6th, 2008 at 07:47:14 PM EST
[ Parent ]

Re: There are two different productivities, though (none / 1)

Looking at employment and hours worked stats, I've come up more against the macroeconomic metric, and this I know has been occasionally called into question here, without (iirc) any deeper work being done.

But that doesn't mean it wouldn't be interesting to see some deconstruction work on the neoclassical theory...

by afew (afew(a in a circle)eurotrib_dot_com) on Thu Aug 7th, 2008 at 09:45:27 AM EST
[ Parent ]

Re: There are two different productivities, though (4.00 / 2)

Like most macroeconomic aggregates, labor productivity suffers from the problem of not being precisely correct. On the other hand, we know that there cannot be such a thing as a precisely correct aggregate measure of labor productivity, so aggregate labor productivity continues to be used in one of its various incarnations because being roughly correct is often of more use than being precise and incorrect.

That does not mean that there are no measurement issues raised by the precise details of the creation of the aggregate ... but rather that the critique of one of the aggregate measures should be framed as a relative comparison with another way of doing it.

So roughly speaking, if N is total employment and W the average wage rate, and (PQ) is nominal GDP (noting that the "real" GDP is nothing but (PQ)/P ... that is, it must be kept in mind that what looks like a product of two primitives is really the primitive, which is artificially divided into component factors) ...

(PQ) - NW

is the amount left over for payments to all other income claiments, whether their claim comes from property rights over plant and equipment, natural resources, or they are extracting a rent from an insider position in providing finance to the productive sector.

So labor share of GDP per capita is W, and the share of all other income claimants is {(PQ)/N}-W

Now, applying the artificial factor P, some price index, leaves the artifact Q, the nominal GDP "corrected for inflation", and the share of all other income claimants is P(Q/N)-W

Dividing by Price to work in values "corrected for inflation", (Q/N)-(W/P) is the per capita non-labor share of real national income and (W/P) the labor share.

That (Q/N) is labor productivity, which obviously rests on two pyramids of approximations, since both Q and N are artifacts, but on the other hand also expresses a fundamental point in the tug of war between labor and non-labor claimants on national income, that if labor productivity rises, it is possible for the real wage to rise without having to win a progressively rising share of national income for labor.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Thu Aug 7th, 2008 at 02:39:51 PM EST
[ Parent ]

Re: There are two different productivities, though (4.00 / 3)

being roughly correct is often of more use than being precise and incorrect.

or, as Keynes used to say: "I'd rather be vaguely right than precisely wrong"

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Thu Aug 7th, 2008 at 06:55:35 PM EST
[ Parent ]

Re: Not really (none / 1)

I would suggest that "productivity" is a word that has had its meaning changed (as with "reform").

Wikipedia says:
Productivity - Wikipedia, the free encyclopedia

Productivity in economics refers to measures of output from production processes, per unit of input.

But what has changed is that unit of input in the public debate has gone from being workhours to money.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Thu Aug 7th, 2008 at 08:49:00 AM EST
[ Parent ]

Re: Not really (none / 0)

But even if you take work hours, it's unclear at best that you get a meaningful statement, because this assumes that coal, steel, rubber and all the other little things that go into making stuff exists in infinite supply, if only we put enough man-hours into extracting them.

That's empty-world economics, and while that might have been fine for the 19th century and adequate for the 20th, we're living in an age where full-world economics is needed.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Aug 7th, 2008 at 12:25:22 PM EST
[ Parent ]

Yes (none / 1)

We desperately need these "full-world" economics - or full-accounting economics - or holistic economics (we need a good name too...) in order to show that a lot of current discourse on growth and propserity is nothing but.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Aug 7th, 2008 at 12:35:55 PM EST
[ Parent ]

Re: Yes (none / 1)

Life-cycle economics.

You can't be me, I'm taken

by Sven Triloqvist on Thu Aug 7th, 2008 at 03:11:35 PM EST
[ Parent ]

No such assumption is made at the macro level ... (none / 0)

... in the macroeconomic labor productivity, the ease or difficulty of getting more goods and services is whatever it is. Its easier to achieve labor productivity gains if the empty world assumptions are closer to being correct, and harder to achieve labor productivity gains if the full world assumptions are closer to being correct, but at the macro level, what it is is what it is.

Where the empty world assumptions comes around to bite the traditional marginalist economist on the buttocks is in dipping down into the conventional marginalist micro-economist to provide an underlying model of how hard or easy it is to achieve labor productivity gains. This activity goes under the heading of "putting the macroeconomic model on microeconomic foundations".

Even there, it is possible to assume absolute caps on material inputs, however it is analytically inconvenient, and the convention in traditional marginalist economics is to only assume analytically inconvenient things if absolutely necessary for the specific analytical problem at hand. Therefore the tacit presumption that there is an additional amount of material inputs available "at some price" is almost universally made, whenever the traditional marginalist economist is not explicitly considering a problem involving a resource limit.

Utsukushikereba sore de ii

by BruceMcF (agila61 at netscape dot net) on Thu Aug 7th, 2008 at 02:48:06 PM EST
[ Parent ]

Re: Not really (none / 1)

Yes,
and I did think about it while writing my comment.

Thinking of efficiency (output/input) in ecological terms, I would say it is fairly easy to estimate by looking at what is not output, that is waste. And our modern societies produce a lot which ends up as waste. Problably a world record in low ecological efficiency. The most ecologically efficient human societies would be those that has little or no waste, that is the societies we see as backwards and poor.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Thu Aug 7th, 2008 at 05:36:43 PM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

Thanks Jérôme.

I'm curious, who linked your story to Brad Setser over at Follow the money?

He responded that the titled of his last post, old habits died hard, apparently applied to this as well.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Wed Aug 6th, 2008 at 04:43:37 AM EST

Not me, no (none / 1)

Someone called "euro": http://blogs.cfr.org/setser/2008/08/05/old-habits-die-hard/

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 06:03:05 AM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

Question:

"Alan Greenspan, the man who has done more than anybody - even including the Bush administration - to impoverish the middle classes for the profit of the ultra-rich, has been given yet another tribune in a Serious Business Newspaper (in this case, the Financial Times of London) to try to provide justification for his past hackdom."

If Greenspan believes his job/function is to do just that,
... impoverish the middle classes for the profit of the ultra-rich, " isn't he in fact doing a wonderful job and is ANYTHING but a hack? Should we criticize Rush Limburger for being a neofacist propagandist when he does a GREAT job at it and makes in excess of $30 million a year?

They're just doing their high-paying jobs. The problem isn't THEM, it's US. We let them screw us!

I love the smell of roast chicken in the morning!

by THE Twank (yatta blah blah @ blah.com) on Wed Aug 6th, 2008 at 07:51:32 AM EST

Google does not know "hackiness" (4.00 / 5)

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 08:24:37 AM EST

Re: Fuck You: Translating Greenspan's hackiness (4.00 / 2)

Republicans fuck up government. The main lesson should not be that govenrment can be fucked up. it is that you should not entrust government, a vital function in society, to Republicans. How hard is that to understand?

Well, to be fair, it's difficult to concentrate on when the Republican nominee for president is getting his ass handed to him by Paris Hilton.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Wed Aug 6th, 2008 at 08:27:29 AM EST

Paris Hilton (none / 0)

http://perezhilton.com/2008-08-05-a-very-important-message-from-2

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 08:35:21 AM EST
[ Parent ]

Re: Paris Hilton (4.00 / 2)

Best political ad of the year, by far. She hit him perfectly, and, better still, got his communications team to respond. If she can turn this into a playful back-and-forth, and make McCain's people say something truly nasty, it will be catastrophic for him.

Just brilliant.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Wed Aug 6th, 2008 at 08:51:02 AM EST
[ Parent ]

Re: Paris Hilton (none / 1)

Though her "all-inclusive" energy policy, thinking that offshore drilling provides something of value, needs some refinement (like Obama's).

Skennah Kowa

by Crazy Horse on Wed Aug 6th, 2008 at 10:12:35 AM EST
[ Parent ]

Re: Paris Hilton (4.00 / 5)

Of course, but it's not meant to be serious.

Still, her proposal is better than McCain's. When you're running for president and lose a debate on energy to Paris Hilton, you're pretty pathetic.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Wed Aug 6th, 2008 at 10:21:07 AM EST
[ Parent ]

Re: Paris Hilton (4.00 / 4)

I think that Paris's mother should make a brief appearance. She should note: "This is how John McCain treats the family of supporters and contributors who had contributed the legal maximum to his campaign. So much for honor and family values!"

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Wed Aug 6th, 2008 at 11:10:15 AM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (4.00 / 5)

"Capitalism is to be credited with the boom, but the bust is due to human nature - NOT to capitalism."

But, but, but... isn't capitalism supposed to be completely in tune with human nature?
And any thing that tries to control it a violation of the laws of nature?

by Torres on Wed Aug 6th, 2008 at 10:15:17 AM EST

Krugman nails Greenspan's article (none / 1)

Paul Krugman - Op-Ed Columnist - New York Times Blog

(A meditation inspired by Alan Greenspan's sententious warning against financial regulation.)
Mileposts:
Oct. 2004: "Overall, while local economies may experience significant speculative price imbalances, a national severe price distortion seems most unlikely in the United States"
June 2005: "Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications."
And let's not forget this classic call:
October 2006: "I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out,"

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Wed Aug 6th, 2008 at 10:34:16 AM EST

Re: Krugman nails Greenspan's article (none / 1)

Can you post a link to here over there?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Aug 6th, 2008 at 10:45:10 AM EST
[ Parent ]

Re: Krugman nails Greenspan's article (4.00 / 2)

Already done

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char

by Melanchthon on Wed Aug 6th, 2008 at 10:46:04 AM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (4.00 / 2)

The BBC are on the case here...

House Price Time Bomb

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith

by ChrisCook (cojockathotmaildotcom) on Wed Aug 6th, 2008 at 01:34:55 PM EST

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

"The losses for the financial system from people walking away could be of the order of one trillion dollars when the entire capital of the US banking system is only $1.3 trillion.
"You could have most of the US banking system wiped out, so this is a total disaster."

Skennah Kowa

by Crazy Horse on Wed Aug 6th, 2008 at 06:28:09 PM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

I have trouble understanding how $1 Trillion could be even close to a cap on financial system losses. Federal guarantees for Freddie and Fanny alone were estimated to be a potential liability of around $5 Trillion. Most of the bad loans were in the big markets such as CA & FL and prices have already declined close to 30% in LA. If prices go down to 50% of peak in these major markets and walking away becomes prevalent, Freddie and Fanny could easily loose $2 Trillion by themselves.

Shadow Government Statistics estimated that by 2006 the total net worth of the US Government, based on GAAP and including Medicare, Social Security and other liabilities was $54.6 Trillion in 2006. This is easily $60 Trillion by now. The only reason for the rating agencies to give U.S. Bonds AAA ratings is that a US default is "unthinkable." They might have to think again.

Closing even the yearly total deficit for 2006 of $4.6 Trillion could not be done by increasing income taxes, even if all income were taxed at 100%.

Part of my disquiet is that I really have no idea of what the worst case yearly demand on non-existent US Government financial resources might be.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Wed Aug 6th, 2008 at 11:19:46 PM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

The total net worth of the US Government in 2006 was, of course, negative $54.6 Trillion. Minor little detail of the sign. I suppose having $54.6 Trillion in a "lockbox" is as impossible as coming up with even a fifth of that amount in any given year.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Wed Aug 6th, 2008 at 11:24:13 PM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

Their figures are not very credible. Net worth is pretty much equal to total obligations. As if the total of all government possessions at every level was worth nothing.

Also, I'm pretty sure that some of those lines are based on estimating an actuarial value for an infinite series of liabilities (always very dangerous), which is highly dependent on what the tax rate will be during all those years.

Yes the US government is in dire financial straits, but this seems more an exercise in accountancy than economics.

"Few can believe that suffering, especially by others, is in vain. - Galbraith"

by Cyrille (cyrillev domain yahoo.fr) on Thu Aug 7th, 2008 at 01:48:58 AM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (4.00 / 2)

I am neither trained in economics or accounting, so this is difficult for me to evaluate. Add in the cognitive biases against conclusions out of the normal consensus and against really bad news, a.k.a. denial, and the question of what is truth becomes very problematic.

My only advantage, geezer that I am, is that I have watched much of this unfold, usually with a mixture of puzzlement, astonishment and dismay. I read Keynes' The Economic Consequences of the Peace in 1964 or '65 and discussed it with grad students in economics. One of his points was, counter-intuitively, that massive reparations by Germany to GB and FR would tend to impoverish the recipients. Other discussions had to do with similar problems in inter-generational wealth transfer relating to Social Security. Such little understanding as I have is mostly confined to the problems.

John Williams' Shadow Government Statistics series attempts to describe the history of how the US Government has stated its budget and various econometric data. Not too supprising is his assertion that metrics have been changed to make the current administration look good. Over time such changes can seriously affect the data, i.e. we can show inflation adjusted growth, but if the measure of inflation has been understated then the inflation adjusted growth will be overstated. The usual mainstream response to this is to deplore and then ignore.

In the late '70s to early '80s Congress and the Carter and Reagan administrations crafted a "rescue" of Social Security. There was legitimate concern that not enough was being withheld to pay for the retirement of the boomers, who constituted a demographic bulge. So the amount withheld was increased substantially. Social Security was "saved."

However, the increased withholding for Social Security was not saved. Reagan budget and tax policies, as David Stockman memorably noted, produced deficits "as far as the eye can see." With my own dim awareness of the problems of inter-generational wealth transfer, I thought that the best way to prepare for the retirement of the baby boomers, whom I preceded by about three years, was to invest the increased withholding in education and infrastructure and to grow the productive capability of the country. I have yet to see a better proposal that I could understand, but I have never seen an explicit discussion of these problems in the US public sphere. Instead, Social Security became the third rail of American politics: touch it and you die.

Instead of investing the increased withholding in areas that conceivably might boost the productive capacity of the USA, the Reagan and GHW Bush Administrations used it to mask deficits resulting from tax cuts, primarily for the rich. Regulatory policy has, arguably, facilitated the flow of some of this withholding revenue into various asset bubbles on Wall Street. Policies under Clinton noticably reduced the budget deficit, but only that part remaining after excluding Social Security, Medicare, etc. which had been taken "off budget." This was clearly and openly proclaimed by all, but not clearly comprehended by many.

Of course "W's" Administration, in conjunction with the Republican majorities in Congress, gleefully reversed all of the Clinton administration's work towards closing the deficit, inadequate though they were. As I understand him, John Williams has computed the federal budget deficits as they would be were the government itself to use the Generally Accepted Accounting Procedures which it mandates for others and were it to include the "off budget" items such as Social Security , Medicare, etc. for which it has been collecting taxes in the form of withholding.

Which is worse: looking at the numbers or ignoring them? Better yet, is there additional context which will make this situation clearer?

Perhaps this subject could be a part of the Socratic Economics Series.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Thu Aug 7th, 2008 at 11:58:05 AM EST
[ Parent ]

Re: Fuck You: Translating Greenspan's hackiness (none / 0)

The twisted words of a very twisted being: Evil is the right word.

I could add other readings on a couple of paragraphs, but all this is excellent and the LTE tops the cake. The curse is still hearing his voice in my head as I read the words because it is such a unique, convoluted style.

Our knowledge has surpassed our wisdom. -Charu Saxena.

by metavision on Fri Aug 8th, 2008 at 06:50:51 PM EST

Re: Fuck You: Translating Greenspan's hackiness (none / 1)

Dear Bubbles Spleengland,

Given that FT recently joined every other media outlet whore in declaring that the latest Pending Home Sale Index figures show things are improving (which even the National Association of Realtors report rejects, albeit deep in the footnotes), your article, and indeed everything that spews forth from that pimple on top of your shoulders, is just another bucket of bullshit.

Sincerely,
N.S. Sherlock

by rifek on Sun Aug 10th, 2008 at 02:02:57 PM EST

Fuck You: Translating Greenspan's hackiness | 76 comments (76 topical, 0 editorial, 0 hidden)

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