This should be written to "Aggregate spending, despite high energy prices and because of the credit bubble [ which this Federal Reserve Board is partially to blame ], appears to have strengthened since late winter. The labor market conditions continue to improve gradually based on an unsustainable housing bubble and reckless consumer spending ""Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor market conditions continue to improve gradually"
"Core inflation has been relatively low in recent months and longer-term inflation expectations remain well contained, but pressures on inflation have stayed elevated."How about housing prices and energy costs? Oh, I forgot they are not included in the CPI.
How about doing more to maintain lending standards? Wait, every American has the right to get a 500K loan even though they have a 70K income, zero money for a down payment and credit score of 600."Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability"
Greenspan is pathetic. He should resign sooner, rather then later. The credit bubble has been 'great' for the short term ( 2001 - 2005 ), but it will be disastrous for the long term. Neglect the long term for the short term, that is Greenspan's gameplan. Remember, "With great power comes great responsibility."
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"With great power comes great responsibility."
ReplyDeleteAnd great responsibility demands great courage, which Greenspan clearly lacks.
Unleaded gas in CT is up to $2.40 a gallon- and thats the lowest price around! How A. Greenspan can sit there and say all is well is incredible. Greenspan is so afraid of GW Bush and and the GOP, he grovels to them- totally afraid to do anything of courage to stop the madness he helped create. Its too late now to do much of anything- except sit and watch the canoe go over the waterfall.
ReplyDelete"And great responsibility demands great courage, which Greenspan clearly lacks."
ReplyDeleteI suggest you read up on Greenspan's handling of the stock market crisis in the late 80's before making such amazingly misinformed statements. Alan Greenspan has acted on his _own hook_ to save the economy in the past. The idea that he lacks in bravery in this aspect is just fiction.
Of course, this entire blog post is totally misinformed, and the blog itself has consistently been on the entire Greenspan/interest rate issue. David's understanding of macroeconomics is, frankly, non-existent, and his posts have used inane anecdote to try to push mistaken general principle. This is not to mention his grossly personal attacks on Alan Greenspan, which leaves out the role of the other Fed governors - for all we know, Mr. Greenspan himself might feel a bit differently than the rest of the governors. A press release doesn't tell us personal views.
The Fed can't just watch _housing_ as their benchmark for when to raise interest rates. For the love of G-d, there is factory capacity, trade deficit, inventory, foreign exchange rates, wage growth, employment, and just a million other things that you have to watch for. I know that the "housing bubble blog" has to blame everyone and everything to keep appearances up, but this is just sad.
Uninformed criticism might be the trade staple of the blog world, but I encourage you to rise above it.
-DMZ
Greenspan has certainly had his problems comprehending reality. Check THIS out. It's a speech he made to the Boston College Conference on the New Economy on March 6, 2000, a mere four days before the dot-com bubble is now recognized to have burst. The key comment:
ReplyDelete... I see nothing to suggest that these opportunities will peter out any time soon.
Indeed, many argue that the pace of innovation will continue to quicken in the next few years, as companies exploit the still largely untapped potential for e-commerce, especially in the business-to-business arena, where most observers expect the fastest growth.
No need to say anymore, I think. — Joe @ BigHousingBubble
DMZ -
ReplyDeleteI'm not interested in Greenspan's personal views unless he wants to make his personal views public; only his professional views really interest me. And there are plenty of economists, bankers, securities traders, myself being one, etc. who criticize Greenspan on the same points he is criticized here, in this blog.
I lived through the crisis in the late 80s and heard what he said about it and I saw how he handled it. I lived through the .com bubble and heard what he said about it and saw how he handled it. I am living through the housing bubble and have heard what he has to saw about it and am seeing how he is handling it. In all cases it has been about the same.
Let me quickly fill in what you cut out:
ReplyDelete"The fact that the capital spending boom is still going strong indicates that businesses continue to find a wide array of potential high-rate-of-return, productivity-enhancing investments. And I see nothing to suggest that these opportunities will peter out any time soon."
I agree with him. The sudden lack of venture capital for funding these things doesn't suddenly mean that there's nothing there to fund - only that people were unwilling to fund them. There are still tons of high ROI ideas out there - Google's amazing IPO comes to mind.
The opportunities didn't peter out. The investment did. Don't confuse the two. It wasn't a mistake to go into IT then, and it isn't now.
I'm sorry if I implied Alan Greenspan can't make mistakes. He certainly can - the G7 exchange rate agreement of the mid-80s comes to mind immediately (do we even keep that anymore?). But there's no convincing arguments, at least from my POV, that he had any choice to do anything except what he did.
Nice blog, BTW - at least you try to keep somewhat professional... maybe a result of you being a journalist.
-DMZ
"I lived through the crisis in the late 80s and heard what he said about it and I saw how he handled it."
ReplyDeleteI'd like to hear your criticisms of this.
-DMZ
"David's understanding of macroeconomics is, frankly, non-existent"
ReplyDeleteI do not have as much knowledge of macroeconomics as others, but to call my understanding of macroeconomics non existent is plain wrong. ( I recieved a B in Macro in college)
"I do not have as much knowledge of macroeconomics as others, but to call my understanding of macroeconomics non existent is plain wrong. ( I recieved a B in Macro in college)"
ReplyDeleteIntroductory Macroeconomics gives you an understanding of the American economy like Introductory C gives you an understanding of the internals of the Linux kernel. That's as plain as I can put it. I got a degree in this stuff (CS and Econ, a thoroughly lovely combination), and even I have a hard time understanding it sometimes.
But mea culpa, my apologies. I am wrong, and you are right.
-DMZ
I will be on Amazon to pre-order this dudes "memiors".. Maybe than we will decipher his "Greenspeak". What is lacking about the Bubble is that is a rip off of future generations. How can you be happy with a Generation and one-half of effortless gains when you have minor kids in the house? Even more eggregeous is all the HELOC on the mortages which means that too many of the heirs may be getting little of this equity..All this blogging while listening to Dean Baker on TV painting a bleak picture of the bubble and then "W" painting a rosy picture of the economy and switching the topic to Energy and Health care prices..Come on W...
ReplyDeleteA recesion in 2006 and beyond is very very likely.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteI have an MBA in Finance and Economics from a top 3 program and I can tell you that anything beyond Macro/Micro 101 is incrementally useless.
ReplyDeleteYou can learn Economics with that, reading the Economist, a strong sense of history, and most importantly, following a few key macro-indicators that never fail (Real Int. Rates, Yield Curve Spread, Activity of Cyclicals, and a few more which are proprietary).