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Goblin Emeritus Says America's Spending Days Are Over
If there is one person in this world who has less credibility than the Goblin in chief, Ben Bernanke, it has got to be the Goblin emeritus, or the man who spawned the monetary policy that will eventually destroy the world. Which is why when we read Alan Greenspan's Op-ed in the WSJ, we cringed, as we actually agree with pretty much most of what he is saying. It may be time to reevaluate our stance on the world: is Goldman just a bunch of really nice guys? Are HFTs just altruistic liquidity providers? Is prop trading not just legalized frontrunning at a massive scale? Will the US hit one quadrillion in debt with 0.01% on the 30 Year? Will Dennis Kneale refute the theory of relativity? The doubt has now set in... But seriously, who but Krugman (and 99% of tenured economists) could read the following and disagree: "The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy...With huge deficits currently having no evident effect on either
inflation or long-term interest rates, the budget constraints of the
past are missing. It is little comfort that the dollar is still the
least worst of the major fiat currencies. But the inexorable rise in
the price of gold indicates a large number of investors are seeking a
safe haven beyond fiat currencies." and this "Perceptions of a large U.S. borrowing capacity are misleading."
Seriously, first Cramer, now Greenspan? What next: Bernanke will hand over all the files that two courts already found him to be legally obligated to disclose as per the Pittman lawsuit? Blankfein will retire and give 90% of his holdings to charity? S&P will downgrade the US to its fair rating of CCC? CNBC will tell the truth?
From the WSJ:
U.S. Debt and the Greece Analogy
Don't be fooled by today's low interest rates. The government could very quickly discover the limits of its borrowing capacity.
By Alan Greenspan
An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.
Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.
The roots of the apparent debt market calm are clear enough. The financial crisis, triggered by the unexpected default of Lehman Brothers in September 2008, created a collapse in global demand that engendered a high degree of deflationary slack in our economy. The very large contraction of private financing demand freed private saving to finance the explosion of federal debt. Although our financial institutions have recovered perceptibly and returned to a degree of solvency, banks, pending a significant increase in capital, remain reluctant to lend.
Beneath the calm, there are market signals that do not bode well for the future. For generations there had been a large buffer between the borrowing capacity of the U.S. government and the level of its debt to the public. But in the aftermath of the Lehman Brothers collapse, that gap began to narrow rapidly. Federal debt to the public rose to 59% of GDP by mid-June 2010 from 38% in September 2008. How much borrowing leeway at current interest rates remains for U.S. Treasury financing is highly uncertain.
Full Op-ed (in which Greenspan also tries to explain what swap spread inversion is) here.
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Only honorable thing for Greenspan now should be seppuku.
When spending like junkies beneftied the people he represents he helped. Now the people he represents want the opposite, that's what he'll advocate. It's simple.
Greenspan made my spine shiver when I read his comments. I believe this was his Dear John letter ("Dear Ben"?) Cramer I think was grasping for straws. Either way, once again, very ominous. I hope everybody has got something they can rely on, if not only themselves. Be ready for a paradigm shift, and be ready to help your loved ones.
That being said, lets take a look at next week....
Stocks are in the midst of their recent volitity spike, and I expect it to stay in this range for next week, the week of the summer solstice. This because either by the following week we get the HFI and a new bubble and this should send the doelarr reeling, or we do not and we get a spike in VIX once again. Either way these options are so muddled that I do not believe it will mitigate these problems; I do not believe the plans of the oilgarchs will come to fruition exactly as they imagined. Destruction of the Neo-Keynsian economic system is eminent, for want or not. I say this because control is obviously the main concern of the oilgarchs, and they too are grasping at straws. Gaining control through destruction is not only Draconian, but immature. I have always said kids are like drunken midgets. I think that the oilgarchs are children. What a delirious playground we are at.
See you at the top of the mountain?
Cramer finally realized something is really wrong, but hasn't yet grasped what is right.
Greenspan knows the whole shithouse is going up in flames, and it's far too late to call the fire department.
A slight correction:The fire department was called, but unfortunately they hosed the fire with diesel fuel, and when that didn't work they switched to AV gas.
Next item up: they will blow out the fire with a thermonuclear bomb.
I am afraid you are right.
That old wizened coot could not resist a smoking BURN on the current FED chief.
When Alan said: "But the inexorable rise in the price of gold indicates a large number of investors are seeking a safe haven beyond fiat currencies,"
He was responding directly to Bernanke's fumbling before CONgress when he said, "I don't fully understand movements in the gold price."
LOL! Alan likes to kick 'em when they're down. Way to make Benny look like a total tool, Al.
I thought CNBS dumped him.
aw, it's dirt simple. the Goblin is just now worried his own retirement/entitlement/whatever is going up in smoke too, as he's "outside" looking in...so very obvious now him flipping.
When cooking fish, it's best to grill both sides...for max flavor ;)
>It may be time to reevaluate our stance on the world:
Ummmm, no I think you've pretty much nailed it. LOL! Again, Big Al just sayin "Hey, it wasn't me. When I started this crap if was OK, I knew what I was doin. But now, geeesh, these guys don't have a clue".
Right Al, we hear ya.
Since he's probably picking out a niche and urn for his remains, he's probably more inclined to start speaking his truth.
Looks like a reputation salvage operation....
+5
It's so beautiful, and so fitting, that AG is who he is: the human incarnation of decaying, Babylonian capitalism.
Greenspan is where Rand's fantasyland capitalism meets the real world.
You use a lot of buzzwords but make no sense.
Greenspan admits to learning that his life's operating principle was a mistake, and then figures out the real deal in just a few months? That man is a genius!
Mmm, nah, just an opportunistic backstab.
http://www.dailymotion.com/video/x41iy4_the-dresden-dolls-backstabber_music
I guess you could also make the case that he was a deep cover operative the entire time, but the facts don't support that thesis. He now has nothing to lose, so he might as well stab the emperor in the kidneys to make himself useful to whatever regime comes after.
This is what I meant in my post the other day about defectors. Sure, it's unpleasant to end up on the same side as the super-criminals, but they're not going anywhere. I'd prefer a peaceful revolution to the chaotic alternative.
Greenspan and crew may be unsavory and immoral, but they're not stupid. Neither is Bernanke, for that matter. Bernanke's primary constituency is the academic-political complex. He's defending its interests perfectly. So many ponzis rest on the decisions that he makes.
Read "Propaganda" by Edward Bernays to get some idea of how "Those People" think of themselves.
+1
I'd say that Greenspan and the boys are preparing to execute a "top kill" on the entire governing apparatus. It was only a matter of time after TARP.
I think that the Democrats were more or less set up to take the fall! You'd have to be a complete idiot or an academic to actually believe that everything could work out post-bailout.
I like it!
"... execute a "top kill" on the entire governing apparatus."
Nicely put.
Top kill - exactly
hyperinflation is the circuit-breaker ... the poison pill.
This quote of Alan's is so revealing (my emphasis):
"Although our financial institutions have recovered perceptibly and returned to a degree of solvency, banks, pending a significant increase in capital, remain reluctant to lend."
Not solvency, but a degree of solvency (less than 100%). Sir Alan has admitted publically that the banks are insolvent.
I don't see how he could have spawned a policy that was already in play since 97 years ago; however, it may be that his policies hastened the inevitable destruction of the US fiat system. Whether he was on the fascists' side all along, I still don't know. I also wonder why he got out when he did...seems like interesting timing.
Without knowing whether he did everything in his power to dismantle and replace the fiat system (it sure seems like he didn't) it is not possible to defend him. But to the extent that he helped pull it all down...well it had to be done sometime.
Greenspan is sleeping with Angela Merkel.
How's that for a visual.
So, there you go. Have a nice weekend.
After having already pictured Alan Greedspasm being spanked by Ayn Rand in her black leather dominatrix outfit, nothing, and no image that you might try to elicit, could scare me further. My mind has already been presented with the ultimate boner-killer.
Alan, you're like herpes, you just wont go away.
Shucks and aw. Bubbles and manias existed long before Sir Alan; the reverence with which so many hold the duplicitous and disingenuous (not stupid) central bankers should sicken anyone who can fog a mirror.
The maestro’s fingerprints are all over the wreck of the Good Ship American Dream; he represents the pirates below deck stealing the cargo and knocking the holes in the hull. And now that the ship is listing they’ve all run up on deck, yelling the ship is sinking, screaming someone has been knocking holes in the hull, pointing fingers and hollering they went that-a-way!!!
Give me a break!
Cramer, IMO, didn’t do anything but act the fool, continuously jumping up and down and making faces on the sidelines to divert attention while the Fed made off with the loot in the biggest daylight financial heist in the history of the world. It’s called total global piracy...with Greenspan now faking the evidence. And Greenspan, unlike Cramer, was below deck all the time.
Follow the money: the treasure chests are in the pirates' cave.
As Jim B says, “Looks like a reputation salvage operation.” .... And as Lennon Hendrix says, “very ominous”…
I think that nails it perfectly.
Never trust the super villain, especially when they act repentant.
I remain convinced that Greenspan has known all along what the consequences of currency manipulation are.
I have this horrible image of them all playing dress up with what's left of the Third Reich down in Paraguay:
"My you look fetching in your jackboots"
"OK 'W', you play Poland this time"...
Greenspan is an intellectual boob. For once, please just say what you think will actually happen. Go one the record like a grownup.
A few points:
Lehman was not a surprise, what was a surprise is it was not bailed out. JPM came in with FED bucks and purchased the company. JPM, in terms of leverage wiping out capital, was in the same mess as Lehman. The difference was JPM had friends at the FED. Greenspan knows this.
Okay, instead of telling us there will be dire consequences, why don't you tell us, in your opinion, what exactly these consequences are?
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Observation: It is clear that Greenspan carefully choosen FED words can only mean one thing. He is the FED congressional messenger.
The verbage between him and Ben are just to calculated. What gives it away, Greenspan never describes crisis, or consequences or unsustainablity. If by saying what may happen, somehow it will come true. Perhaps he is afriad of scarring the congressman. If he does maybe they will just shoot the messenger.
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"Perceptions of a large U.S. borrowing capacity are misleading", its funny but the FED plays a huge roll in these perceptions.
Greenspan must have been shown some FED data. He knows that the market for sovereign debt will collapse, and the US has the largest exposure, in terms of magnitude and sensitivity to rates. Once the FED reaches a point to QE fund Treasury, rates will be increasing right up to an exit of buyers. People may still want USD for trade offsets, but the debt market will not support US expenditures. When we reach this point the FED will only exist to QE cash flow.
Mark Beck
http://1.bp.blogspot.com/_azimCSzqNnc/S16kIzpZBJI/AAAAAAAAEVs/6XKEzGSarLM/s320/bernanke+bare+ass.jpg
As many have noted, Greenspan was a gold-backed currency proponent before his appointment. Did he sell out? Certainly, as Cognitive Dissonance has pointed out, people can take on positions that counter true beliefs and true self interest. Greenspan was an intellectual academic who became a politician and subsequently was able to compartmentalize and rationalize positions that did not reflect his earlier beliefs but reflected his own current self interest. As an idealistic graduate student who did not understand the capitalist end game that inevitably attempts to perpetuate short term quarterly returns to the extent that morality and legality are skewed or overpowered through governmental influence and regulatory capture after exhausting other ways of perpetuating quarterly income growth/bonuses of the investment banks who control corporate evolution, I believed in Greenspan and Adam Smith. My belief was betrayed. Specifically, on Wall Street where return on long term capital investments eventually return to the norm even after major productivity or patent/resource discovery-related windfall gains can temporarily cause returns outside the norm, the human greed factor can unleash intentional albeit rationalized informational incongruities that result in malinvestments and fraud. Before healing from my idealism during the last decade of very evident corruption and regulatory/legislatory capture that distort free market investment and returns, I wrote a paper supporting Greenspan's position on Glass-Steagall. So Greenspan may be an honest intellectual influenced by his own superego and tendency to please superiors, but I don't think he is an intentional liar. My paper was titled "Greenspan as King: The Case for Repeal of Glass-Steagall". I have had to eat my own words after renouncing idealism due to the corruption of pure capitalism and captured regulation beyond my wildest dreams. Similarly, to me, the above referenced article by the former Fed Chief is his denouement. Greenspan's road back from King to mere mortal is merely a Shakespearean tale of learning that his power and influence were based on his own overblown ego that prevented true reflection until he was an old man. Now, no longer in charge of anything but his morning oatmeal or coffee and at long last able to reflect on his own folly and ambition, he first defended himself and his record in his book and is now abandoning his record to return to intellectual honesty and preserve his legacy .
Or perhaps Bix is correct that Greenspan intentionally drove the stake into the heart of fiat?
http://www.roadtoroota.com/public/101.cfm
There's a whole "printing money out of thin air" quality to fiat currency by its very nature. Like every other medium of exchange other than essentials like food, fiat currency works because enough people "believe" in it. When a tipping point is reached and people no longer "believe" then the jig is up. Runs on banks, bond market collapses, currency loses most of its value. The US Dollar is ok for now because its the most convenient medium of exchange. However, the country behind the US Dollar is in a state of rapid financial erosion.
Hence, the price of gold, and my growing little hoard of precious metal coins.
Greenspan who is he ??..well if you can stand it look to who he married..a leftist red diaper doper baby. A propagandist for NBC and the DNC who's hatred for America is documented on her "news" show for all to see..perhaps his gunning the spending/debt was part of the "plan" all along to bring us to socialism's big orgasm..the new world order.
a tip of the hat to Mr weiner aka mike savage for the use of his inflamitory speech.
flame away fellow travelers and useful idiots.
EURO bullish signals I warned of during the past few weeks - has resulted in the recent rally and the daily chart remains bullish.
The DOW/SP500 counter trend rally suggested on June 13 continues, however ...
http://stockmarket618.wordpress.com/about
We do NOT appreciate your spamming of EVERY thread with your irrelevant links.
Please take it elsewhere.
Grand Supercycle: please stop posting your gay porn links.
Why would Greenspan come out with this now?
“Knaves think nothing can be done without knavery.” ~ Thomas Fuller (1654-1734)
Greenspan can’t think without cheating.
Now, “America’s spending days are over” and a new round for the investment bankers is just beginning…
DOW chart update :
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
Grand Supercycle: please stop posting your gay porn links.