Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Here's a draft:


Dear Sir,

It's oddly fitting that Alan Greenspan should argue in favor of continued self-regulation of the financial sector ("We will never have a perfect model of risk", 17 March) on the very day that it demonstrates its absolute failure as the only solution to avoid complete market panic and failure is public intervention, in the form of Fed guarantees over Bear Stearns liabilities.

After denying for years that there was any asset bubble, Alan Greenspan now describes it in excruciating detail, and concludes that it was inevitable, because it is the very nature of financial markets to be occasionally irrational, and to engage in booms and busts. While such a (correct) assessment would seem to scream for much stricter regulation on how the financial world can be allowed to play with other people's money, to limit such cycles, his insistence that, instead, nothing should be done to limit this is an extraordinarily explicit call to privatise profits (during the boom) and socialise losses (in the aftermath) and, as such, should be treated with all the respect that political extremists deserve, ie none.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon Mar 17th, 2008 at 06:55:53 AM EST
I find myself so fuming that I find it hard to provide a level-headed opinion. But it seems to capture what must be said quite concisely, except that I have a problem with that sentence:

"it demonstrates its absolute failure as the only solution to avoid complete market panic and failure is public intervention, in the form of Fed guarantees over Bear Stearns liabilities."

Do you mean failure leads to public intervention? Should we insert a comma, or is it a typo?

Anyway, I find myself in an uneasy situation these days: I am a consultant, and the very person who bought my services for 4 months seems to like to talk quite a lot (not a problem), but also reckons that Greenspan "has always been brilliant", and that he's being extremely unfairly criticised now from things he can't help because he's no longer in charge...

I am unable to lie, but I find that I very quickly exhaust my limited repertoire of "really?", "interesting", or "mmm".

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Mar 17th, 2008 at 07:08:50 AM EST
[ Parent ]
I mean that self-regulation is failing to solve the current crisis and thus that public intervention is needed after all.

Happy to get clearer, improved wording suggestions!

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

by Jerome a Paris (etg@eurotrib.com) on Mon Mar 17th, 2008 at 08:12:08 AM EST
[ Parent ]
OK, I thought that's what you meant.

But there was the impression that public intervention=failure, which of course is the case in libertarianworld. Here in realworld, it may not be so. So, what about, "failure that leads to public intervention after all".

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Mar 17th, 2008 at 08:17:22 AM EST
[ Parent ]
I wish you could add a P.S. that includes links to all your predictions that came true and say "you can't say something 'could not have been predicted' that WAS predicted."  

It's similar to the situation one finds oneself in when asking "since a person like ME could assess Bush's war claims and analyze his statements and positions and the other available evidence to conclude that he was A LIAR, why couldn't those people in the Congress figure that out, too?"  "Who could have known he would lie to us?" they ask, and millions of us answer "Us, you d***wads!"

So now they say "No-one could have predicted this," and we answer "Well, actually, just for starters, there's Jerome in Paris," so I hope those words turn into tomatoes and go flying back at you, Greenspan.

Karen in Austin

'tis strange I should be old and neither wise nor valiant. From "The Maid's Tragedy" by Beaumont & Fletcher

by Wife of Bath (kareninaustin at g mail dot com) on Mon Mar 17th, 2008 at 11:25:41 AM EST
[ Parent ]
How about:

" . . . on the very day that self-regulation not only demonstrates its helplessness in the face of mounting market panic but also the need for public intervention, in the form of . . . "

I hope this doesn't come too late to be helpful.

by keikekaze on Mon Mar 17th, 2008 at 10:35:48 PM EST
[ Parent ]
The clearest and shortest formulation is probably;

" . . . on the very day that self-regulation demonstrates its helplessness in the face of mounting market panic, and therefore the need for public intervention, in the form of . . . "

by keikekaze on Mon Mar 17th, 2008 at 10:43:36 PM EST
[ Parent ]
Jerome a Paris:
on the very day that it demonstrates its absolute failure as the only solution to avoid complete market panic and failure is public intervention, in the form of Fed guarantees over Bear Stearns liabilities.
How about
on the very day that self-regulation demonstrates its absolute failure, and the only solution to avoid complete market panic and collapse is seen to be public intervention, in the form of Fed guarantees over Bear Stearns liabilities.


It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris
by Migeru (migeru at eurotrib dot com) on Mon Mar 17th, 2008 at 08:23:36 AM EST
[ Parent ]
public intervention, in the form

remove the comma:

public intervention in the form

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris

by Migeru (migeru at eurotrib dot com) on Mon Mar 17th, 2008 at 08:28:00 AM EST
[ Parent ]
Yes, very nice. Much better than mine.

I was mentally inserting the comma in the wrong place, right after market panic, which sort of changed the meaning.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Mar 17th, 2008 at 08:29:57 AM EST
[ Parent ]
How about,

Sir,

We have three words for Mr Greenspan: What. The. Fuck?

Sincerely,

Everybody



Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Mar 17th, 2008 at 07:27:06 AM EST
[ Parent ]
LOL LOL LOL

You should send it.

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris

by Migeru (migeru at eurotrib dot com) on Mon Mar 17th, 2008 at 07:52:35 AM EST
[ Parent ]
Heh, I'm not sure the Very Serious Financial Times would appreciate it.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Mar 17th, 2008 at 07:54:46 AM EST
[ Parent ]
Send it anyway! It's the perfect answer to Greenspan's incoherent witterings.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 17th, 2008 at 08:03:39 AM EST
[ Parent ]
Maybe with one of those "I can has cheezburger" cat pictures, too?  We could make a whole op-ed out of it.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Mar 17th, 2008 at 08:40:05 AM EST
[ Parent ]
[Photo of bear]

I can has $2/share and extra fishy plz?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 17th, 2008 at 09:28:07 AM EST
[ Parent ]
Humorous Pictures
see more crazy cat pics

You're clearly a dangerous pinko commie pragmatist.
by Vagulus on Mon Mar 17th, 2008 at 01:34:30 PM EST
[ Parent ]
Plus, we don't want to confuse him.  He's not aging well.  His mind is going fuzzy, and he's starting to look like Andrea Mitchell.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Mar 17th, 2008 at 08:41:55 AM EST
[ Parent ]
Alright, I sent it, so I expect we'll see it tomorrow morning if they don't just put it straight up on the front page.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Mar 17th, 2008 at 08:46:55 AM EST
[ Parent ]
The repeal of Glass-Steagall, initiated in 1980 and completed in 1999 has given us  the savings and loans crisis and the subprime crisis, both with a lag of about 8 years. Regulation works. It worked for 50 years. But, as John K. Galbraith said in the foreword of the 1975 edition of his 1954 classic The Great Crash 1929,
In the wake of the 1929 crash, and with a view to preventing another runaway boom and the associated abuse, the Congress passed some tolerably astringent legislation including the Securities Exchange Act of 1934. It was not, at the time, especially necessary. Markets and financial adventure were then and for a long while after restrained not by the S.E.C. but by the memory of what happened to so many in 1929.

By the sixties this memory had dimmed. Almost everything described in this book had reappeared, sometimes in only a slightly different guise. Instead of the investment trusts there were now the mutual funds. Matching Blue Ridge and Shenandoah in general scope and financial peril were the International Investment Trust and the Fund of Funds. Matching and possibly surpassing the vaulting imagination of Harrison Williams and Waddill Catchings, of Central States Electric and Goldman, Sachs was that of Edward Cowett and Bernard Cornfield, the miracle men of I.O.S. The admiration for skill in deployment of corporate capital that was once lavished on Samuel Insull and Howard Hopson settled now on the men who were parlaying smaller firms into big conglomerates. There were glamour stocks in both periods; in both periods glamour was a substitute for substance. Scholars and politicians lent their names and blessings to the new promotions as had their counterparts forty years before. In the sixties as in the twenties men intended by nature for mentally undemanding toil became rich for a while. It was only that the market was going up. Some things in 1970 were worse. Wall Street houses were markedly more incompetent in their management than in the twenties and expanded much more recklessly. The consequences when the collapse came were far more troublesome than in 1929.

...

Yet the lesson is evident. The story of the boom and crash of 1929 is worth telling for its own sake. Great drama joined in those months with luminous insanity. But there is a more sobre purpose. As a protection against financial illusion or insanity, memory is far better than law. When the memory of the 1929 disaster failed, law and regulation no longer sufficed. For protecting people from the cupidity or others and their own, history is highly utilitarian. It sustains memory and memory serves the same purpose as the S.E.C. and, on the record, is far more effective.

It's been another 40 years...

As for Greenspan's

We will never be able to anticipate all discontinuities in financial markets. Discontinuities are, of necessity, a surprise. Anticipated events are arbitraged away. But if, as I strongly suspect, periods of euphoria are very difficult to suppress as they build, they will not collapse until the speculative fever breaks on its own. Paradoxically, to the extent risk management succeeds in identifying such episodes, it can prolong and enlarge the period of euphoria. But risk management can never reach perfection. It will eventually fail and a disturbing reality will be laid bare, prompting an unexpected and sharp discontinuous response.
all I have to say is that just because something is unpredictable doesn't mean it is unexpected.

Actually, maybe his specific claims about risk modelling merit a separate deconstruction diary.

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris

by Migeru (migeru at eurotrib dot com) on Mon Mar 17th, 2008 at 07:51:22 AM EST
[ Parent ]
This is precisely why it is not just the GOP, but the entire ruling class in the US, Democrat, Republican, that will have to go.

Bernanke's actions last night show that these fuckers will not give up without a fight, and that they fully intend to hold on the the stones of flesh they have stolen over the past 2+ decades. It's going to take a lot more than simple policy discussions nibbling around the Anglo-American neo-liberal consensus, which is about all the Democrats are capable of, to provide the solutions for what is about the fuck the entire American middle class.

The only silver lining? That very same class has been actively participating in the fucking of the working class and poor in this country for decades now, so in a way, this is a delicious come-uppance.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Mar 17th, 2008 at 10:20:09 AM EST
[ Parent ]
about the fuck

to

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris

by Migeru (migeru at eurotrib dot com) on Mon Mar 17th, 2008 at 10:22:51 AM EST
[ Parent ]
I like that new quote.

Of course, having to fight that battle is nothing new. I've had a diary on Georges Marchais bouncing around in my head for the past couple of weeks (one of the famous people I've met in my life) on that very subject...

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Mar 17th, 2008 at 11:00:16 AM EST
[ Parent ]
with Mig's input and several sentences cut into shorter ones:


Dear Sir,

It's oddly fitting that Alan Greenspan should argue in favor of continued self-regulation of the financial sector ("We will never have a perfect model of risk", 17 March) on the very day that self-regulation demonstrates its absolute failure and the only solution to avoid complete market panic and collapse is seen to be public intervention, in the form of massive Fed guarantees over Bear Stearns liabilities.

After denying for years that there was any asset bubble, Alan Greenspan now describes it in excruciating detail, and concludes that it was inevitable, because it is the very nature of financial markets to be occasionally irrational, and to engage in booms and busts. Such a (correct) assessment would seem to be a call for much stricter regulation of how the financial world can be allowed to play with other people's money to limit such cycles. Instead, his insistence that nothing of the kind should be done is an extraordinarily explicit call to privatise financial profits (during the boom) and socialise losses (in the aftermath). As such, it should be treated with all the respect that political extremists deserve, ie none.

Send any comments quickly as I intend to send this out soon.

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

by Jerome a Paris (etg@eurotrib.com) on Mon Mar 17th, 2008 at 11:20:46 AM EST
[ Parent ]
"As such, it should be treated with all the respect that political extremists deserve, ie none."

replace that with

"As such, it should be treated with all the respect that political extremis_M_ deserve, ie none."

Or I dunno.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Mar 17th, 2008 at 11:31:18 AM EST
[ Parent ]
amended as proposed and sent.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon Mar 17th, 2008 at 11:52:40 AM EST
[ Parent ]
addd something along the lines of "why should we even begin to take advice from a man who admits he cannot see the inevitable".

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Mon Mar 17th, 2008 at 11:36:00 AM EST
[ Parent ]

Display:

Occasional Series