Wednesday, October 12, 2005

Greenspan's Speech on Economic flexibility

In Greenspan's speech today before the National Italian American Foundation:

Moving forward, I trust that we have learned durable lessons about the benefits of fostering and preserving a flexible economy. That flexibility has been the product of the economic dynamism of our workers and firms that was unleashed, in part, by the efforts of policymakers to remove rigidities and promote competition.

Although the business cycle has not disappeared, flexibility has made the economy more resilient to shocks and more stable overall during the past couple of decades. To be sure, that stability, by fostering speculative excesses, has created some new challenges for policymakers. But more fundamentally, an environment of greater economic stability has been key to the impressive growth in the standards of living and economic welfare so evident in the United States.

The 'greater economic stability' is a sham. There is a dearth of economic stability when the US has a:

  • ~ $700 billion trade deficit
  • 8 trillion Federal Debt
  • ~ 550 billion Federal Deficit ( war spending included)
  • Housing Bubble
  • High Energy prices ( oil & natural gas)
  • a non existant personal savings rate ( actually negative )

Greenspan is about to retire. The next Fed Chairman will have to deal with a very different economic landscape next year.

11 comments:

  1. Greenspan will go out-and it MAY represent the end of a political and economic era in the USA. A conservative- who idolized Ayn Rand, an anti communist who totally believed that the free markets would 'solve all'. Well any political message can become long in tooth and berift of corruption,power and greed. Perhaps MS. Rand, was too idealistic to believe this could happen- and that total freedom and free markets where wonderful, and could not become Totalitarian.
    Well extremes of both the left and right in fact exist. Mr. Greenspan has lost his sense of objectivity. He has in fact become a slave to a fascist form of economics, at the order of his masters. Hopefully, in the American concept of checks and balances- we can gravitate away from this. Greenspan's legacy, will be the turn back to the center, and evenutally the left- something he perhaps never realized.

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  2. To be sure the new Fed Chairman will be tested sorely by the market. How he responds will determine the economic outlook for the next decade.

    I disagree that the US will turn to the left. Look at the anemic growth in Europe and Latin America. We simply won't have any of that in this country.

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  3. Latin America has not been run by many who even called themselves "left" for 20 years. Now you have Chavez and Lulu, but before that, no one for quite a while.

    We can simply say we won't have certain things, but reality catches up eventually. Because of our trade, energy, and financial policies of the last 16 years, we are in trouble.

    What "people" seem to want right now is some sort of populism (restricted trade, restricted immigration, and some government activism), but I don't think the elites will allow that, so we might be in for quite a mess when the stuff hits the fan.

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  4. scott

    The US has always gone through political and economic cycles-we are now at the far right-the most since the 1920s- or perhaps ever in the history of the nation. We are the only represenative democracy on earth without affordable health care, we have a wideneing gap between the halves and half nots, we have an arrogant and power hungry corrupt Republican party. How much will you have to pay to heat your home this winter? The far right, tax cuting very pro business far right harks on about gay rights, defies the constitution with allowing the split of separation of church and state to be disolved- add all this to record deficits, debt, and a housing bubble now beginning its fast or slow meltdown. Add to this Iraq and the threat of more terrorism. The far right and their religous 'crusade' 'corporate economic facsism -ala Greenspan, extreme nationalism (' you are with us or against us') and agressive pre-emptive foreign policy (smacks of the right-remember Nazism and Italian Fascism) and 'scapgoating'others with their moral philosphy all reak of something bordering on fascism. With all of this, it makes perfect sense after 35 years of this 'swing to the extreme right' it most likely will bring significant changes in the coming years. And truly, the sooner this happens- the better off we will all be. You say we will not turn to the left? Then what way we will turn? FDR turned to the left- thats one of the reasons we have the few social safety nets we have today- till the far right... Reagan, Bush tried to hijack them as well.

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  5. You forgot the money supply and credit bubble in your list. Money supply and credit has frothed recklessly in the last decade setting up inflation, and in 2004 and 2003, global liquidity increased 20% each year. You can thank the Fed and Congress for the last 40 years… That's inflation, my friend, and it will have serious affects the stock of capital / savings.

    Speaking of savings, you should add that to your list: the US has abandoned savings.

    Otherwise, it is a back flip in logic to blame the philosophy Greenspan supposedly supported in the early 1960s for the absurdity that is his legacy since 1986. He abandoned most everything that could be remotely considered laze fair in favor of pseudo Keynesian monetary and credit meddling = Central planning / banking. This is the tool of both the left and the right – get that much straight.

    Now, it is correct to point out that The Fed is about interests specific to the Fed and those who retain political power, but it cannot also be denied that large government of any type is a married bedfellow to Central Banking and the power to print money and create endless amounts of debt that will be deflated away in order to offer, in the short run, goodies for the voters that are modern opiates of the masses. But let’s be clear: the left has its preference for pork, and the right its own.

    Skytrekker is and example of the left. Sky laments that the US has not socialized sufficiently to offer "affordable" healthcare, oblivious to the fact that the more you socialize the more dysfunctional the checks and balances become, and so more money must always be thrown at the problem from other areas of the economy, or from the Fed or via new debt. Already the unfunded liabilities off the books that are promised to elderly and future generations will most certainly bankrupt this country, and that means The Fed will turn on the money supply spigots to help the nation inflate its way out of the mess.. As if that would work…

    Incidentally, the alternative to the right AND the left is not necessarily the center. It is freedom. The right and the left -- and even “the center” are equally enamored with central planning and political favoritism to industry and constituencies that meet their own agenda for trading resources and rights -- confiscated from the masses -- in exchange for votes. They just disagree on the who, what and how, and all use the same quasi authoritarian means of force, laundered, of course, through increasingly mobocratic elections. Each fights the other for control of the trough.

    Freedom on the other hand, is freedom.

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  7. C your 'freedom on the other hand is Freedom' reminds me of Orwell in '1984' Freedom is Slavery...love is hate, war is peace- The far left is as extreme as the far right- and what we have now is the far right. 1984 presented both a scary vision of the extreme left and the far right meeting. The far right believes in central planning- from the brains of the corporate state that they have nurtured. Hitler showered huge tax cuts on German corporations, among them the company that produced the chemical to kill millions in concentration camps that where 'morally and culturally inferior'.........

    In Nazi Germany, the extreme far right -which is a prototype of tolartarianism, shows you how 'free enterprise' is readily accepted, with exreme nationalism, scapegoating of groups (gays, Jews, etc) for the 'moral decline' of the fatherland. Aggressive foreign policy to 'promote' the concept of 'spreading' the 'superior' ideas of the 'master race' The paralells between the current right wing administration and that of far right regimes of the past is startling.

    In the days before regulation we had meat factories in the Chicago stockyards producing unsafe food- the so called 'left' in the progressive era, gave us the USDA, safe working conditions, child labor laws, etc. If the current GOP had there say- this would all be abolished- as would social security and medicare. Yes we will swing back to the left- and reforms will begin again, just as they have been in the past, when the gross excesses of capitalism are exposed. And guess what? You will have to live with it- till we swing back to the right in another 40 years or so. Trouble is the fascistic tendencies of the current republican regime is very troubling- and threatens our democracy more then FDR's flirtation with socialism 70 years ago.

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  8. Carlton WainwrightOctober 13, 2005 1:47 PM

    The problem is that yoy guys know the price of everything, but the value of nothing. Why do you assume that the GOP is the problem. Tell me the difference between the GOP and the Democrats. At least the GOP stands for something, the Democrats are against the GOP and stand for nothing else. If the GOP became pro-abortion the Democrats would flip merely because their stance in anti-republican.

    The fascist tendencies are not of this republican administration. They have been ongoing for quite a while and transcend the major parties. Time was that democrats like Daniel Patrick Moynihan actaully cared about the people. Now both sides want to attain the greatest power for themselves and the greatest economic benefit for their supporters. Not much else matters anymore.

    You are misguided when you compare our right wing with the Nazi parties of the 1930s. The social, economic and historic context that you are completely not considering, completely separate these movements. But then again, given that this is a liberal blog, it is to be expected that you will simply label anyone that you perceive to have a different viewpoint as a nazi, racist, gay basher, etc.

    You all miss the point, both sides are seeking to continue to foster and exploit the materialism and corresponding death of spiritual values that is manifest in this nation today. Our Constitution is at stake, a document that I believe to be spiritually or divinely inspired. But to you, the issue is the housing bubble and to others you are fools. As long as you focus on such issues, you will continue to be blinded from the greater issues at hand. Then again, as long as both sides are fighting over the bubble, you won't be able to see the interests and changes being triumphed by both parties at our expense.

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  10. Then I would assume that the current Republican idealogy is 'Fascist'
    and the Democrats as less 'fascist' which again proves that the idealogy of the last 35 years is coming to a close.

    One of the greatest attributes of the constitution of this nation is to have 'checks and balances', the ability to breath and grow and adapt to a changing society and culture- lets treasure that, and hope it continues.

    so in ending- the term 'fascism' is in fact an objective evaluation of both past and present political and economic idealogies. And it does in fact refer to a 'right wing idealogy' therefore, it is totally fair to compare the current GOP as being extreme right wing, and therefore carrying the definition of being 'fascist'. I would suggest you look up the term 'fascism'- and you will find the parallels are strikingly the same with the Nazi's of the 30's and those of the Republican party of today- in geographic regions outside the northeast, AZ, and Ohio-

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  11. McGoo is a monkey. He is the worse fed reserve chairman ever. He basically is to blame for our huge trade imbalance bubbles in re and stocks. everything. He has ruined our currency.

    Greenspan sucks!

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