Behold The Face Of Central Banker Hubris

Tyler Durden's picture




 

Submitted by Simon Black of Sovereign Man

Behold The Face Of Central Banker Hubris

March 18, 1996. It was the height of the dot-com boom years. And gracing the cover of Fortune magazine was a photo of a rather smug looking Alan Greenspan, then Chairman of the US Federal Reserve.

The headline across the top-- "It's HIS economy, stupid". The inside story was entitled "In Greenspan We Trust".

And the article went on to suggest that, no matter WHO won the presidential election that year between Bill Clinton and Bob Dole, Greenspan would still be running the economy. And handily.

This is a major testament to the state of our financial system. We award a tiny banking elite nearly totalitarian control over our money supply... and by extension, the economy.

We're just supposed to trust that they're good guys. Competent guys. That they know what they're doing.

Fast forward almost two decades. Long Term Capital Management. The NASDAQ bubble. The real estate bubble. The credit crunch. The mortgage crisis. The banking crisis. The sovereign debt crisis.

Now, this seemingly interminable series of emergencies is by no means the consequence of a single individual. But it's clear that Greenspan (and his successor Ben Bernanke) have had, by the very definition of their position, tremendous influence in getting us to this point.

Yet Greenspan's new book, The Map and the Territory, explains why he never saw any of this coming.

(You can read some of this for yourself if you're so inclined-- Foreign Affairs magazine just published an adapted excerpt from the book.)

Greenspan's explanation is as infuriating as it is arrogant.

He stops far short of accepting any responsibility, and merely states that the "conventional method of predicting macroeconomic developments. . . had failed when it was needed most, much to the chagrin of economists."

And of course, he melts his culpability away into the great masses of other economists, brashly stating that "virtually every economist and policymaker" completely missed the warning signs.

Yet as irritating as Greenspan's confession may be, there is no surer condemnation of this faux-science of economics than a former maestro himself pillorying its deficiencies.

Let's put it more bluntly. The guy who used to be in charge of the US economy openly admits that the 'science' they rely on to make decisions is fundamentally flawed.

The only thing these central bankers know how to do is print more money. Yet, as Greenspan tells us, they're completely ill-equipped to be making these decisions. Nor do they realize how severe the consequences will be.

John Maynard Keynes, the godfather of their economic models himself, once wrote:

"The process [of debasing the currency] engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

Not one man in a million. Based on Greenspan's own admission, this includes central bankers as well.

If all the objective evidence, and even their own assessment, points to the inevitable conclusion that this system is broken, isn't it time to consider taking independent steps outside of this system to protect what you've worked for your entire life?

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Sun, 10/27/2013 - 19:10 | 4096090 FieldingMellish
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All hail Mr. Yellen!

Sun, 10/27/2013 - 19:39 | 4096165 NoDebt
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Indeed.  We'll be at a buck-twenty with 9 zeros behind it PER MONTH by the end of his/her first year.

Greenspan... just trying to walk back his earlier statements that were tantamount to admission of guilt.  All the regulators crawling all over the banks even before 2008 and they couldn't see it coming?  Please.  I'm not buying it.  There are only two possible excuses:  incompetence or corruption.  Make them both punishable by public hanging and I will no longer care which way they plead.

Sun, 10/27/2013 - 20:03 | 4096215 Zer0head
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sadly there is a paywall but if any canucks are out there and have access

 

Bank of Canada Governor Stephen Poloz has dropped the bank’s tightening bias.

 

Poloz dubbed ‘Yellen of the North’ for loosening language

At last, the Bank of Canada is acknowledging what plenty of business people and more than a few analysts have been saying for the better part of two years. Canada’s economic engine is sputtering, that troubled U.S. and emerging export markets are in no position to provide a badly needed lift and that previous forecasts were simply too rosy.

Sun, 10/27/2013 - 20:31 | 4096280 Millivanilli
Sun, 10/27/2013 - 21:39 | 4096435 markmotive
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Greenspan doesn't need to apologize because he's a mere human. And humans never apologize.

http://www.planbeconomics.com/2013/10/greenspan-i-dont-apologize-for-mis...

Sun, 10/27/2013 - 23:44 | 4096708 TwoShortPlanks
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First Rule of Bankruptcy: When faced with certain Bankruptcy and subsequent Liquidation of assets, transfer all good assets and equity into a newly created entity, and hang the creditors with the toxic assets and debt of the old.

China’s Bretton coup d'état: http://twoshortplanksunplugged.blogspot.com.au/2013/10/chinas-bretton-coup-detat.html

Mon, 10/28/2013 - 08:50 | 4097093 GMadScientist
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You're on the right track watching the SDR, but the thrice abuse of metaphor is unnecessary.

 

Sun, 10/27/2013 - 22:29 | 4096581 Otrader
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Ha!! Pretty close.  But, why must you insult the blobfish?

 

Mon, 10/28/2013 - 08:51 | 4097100 GMadScientist
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Asians will totally eat that; possibly raw. Greenspan? Not so much.

 

Sun, 10/27/2013 - 20:37 | 4096298 geminiRX
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That policy statement the last nail in the pending Canadian economic disaster. They desperately needed to increase rates to kill the housing bubble. The "splat" will be epic. 

Sun, 10/27/2013 - 20:55 | 4096343 DaveyJones
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and a lovely face it is Jack

Hughe's Bris 

Sun, 10/27/2013 - 21:40 | 4096439 markmotive
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Canadian housing - if it is in a bubble - is beyond saving via monetary policy.

Sun, 10/27/2013 - 20:31 | 4096287 Caviar Emptor
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NoDebt: the Savings & Loan crisis was the first clearcut sign that real estate was a bubble and banking was in  conspiracy with politicians and the Fed (can you say Neil Bush?)

Sun, 10/27/2013 - 20:04 | 4096217 Jack Burton
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Indeed! Yellen? What we are seeing is another victory for the Greenspan Party that has a death grip on the US financial system via their sole ownership of the Central Bank of the USA. This branch of government is not elected, is not responsible for a fair and balanced free market economic model. NO! There are given the freedom and right by law to run the financial system for the interest of a small group of bankers and their employees across upper management in the banking system.

American are slaves to banks and the banker class. Nobody can argue that point, in fact, nobody even bothers to try and argue that American Banks are not using the system they control to profit themselves and to strip 99% of America of it's savings, it's earnings and it's economic future. The fact that both US political parties support this system and defend it show that the corporate bribes they take does effect their votes and their party governance.

Sun, 10/27/2013 - 20:40 | 4096308 Caviar Emptor
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American are slaves to banks and the banker class. Nobody can argue that point

JAck: It's true, but merely one facet of the truth. American vanity and exceptionalism, embodied in the joking references to Greed Is Good, Shop Till Ya'All Drop, The Decade of Excess....etc also tell of another truth: most Americans were unwilling to do the hard work and heavy lifting that it would take to re-build a new and stronger economy. That is unfortunately one of teh hallmarks of a society once vital entering into decline. The "Can-Do Spirit" was gone and citizens voted overwhelingly for politicians that would maintain the status quo and oppose any kind of serious reform but support an ever stronger and more paranoid military/intelligence complex. The thoughts at the time of the fork in the road were that Americans had evolved beyond making anything and had evolved into brains -only service workers, and the capitalist/bean counters to the rest of the backward planet. Things turned out different than was hoped

Sun, 10/27/2013 - 21:03 | 4096363 Ranger4564
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No one argues because it is a fundamental aspect of capitalism. As much as people are loathe to accept culpability, profiteering is what is celebrated by most people, mostly brainwashed people, and those doing the profiting. It is pretty tough to challenge those who profit the most, when your own objective is to be like them, only you're not.

The reason so many people in business can be so unethical, is as the mantra goes, there is no room for morality in business - they mean capitalism.

We're not watching the death of capitalism, we're watching the death grip of capitalism. People can't seem to recognize the difference. When Rockefeller was destroying all of the other oil producers, he was being a capitalist. He had them by the balls. Same way the bankers have us by the balls. To imagine a more noble form of capitalism is naive. When was there a "fair" economy?How can you describe fair when profit is the only imperative?

The other irony, or I can't believe you can say that, is people will say that it's impossible to control the global markets, that no one can control the economy, that the reason free market capitalism is so necessary is because of the price discovery mechanism, but then the same people will complain that there are people who are warping / distorting the market, killing free market capitalism. So it can be controlled? Like the Libor scandal / IMF / BIS / WTO / FED / bubbles / crashes / gold price suppression / bitcoin collapse / boom doom and gloom?  Geezus... people, there is no economy, you / we've all been had. And the main criticisms of economics are laughable. They are not trying to explain the mechanics of our social exchange. They are describing the world according to their model of theft.The past 5 years should be proof to everyone that someone can control the economy and they have been controlling the economy for a very long time.

 

 

Sun, 10/27/2013 - 21:14 | 4096373 Cabreado
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It is interesting that when (not just) you argue that the control is with the bankers, you also reference Congress but effectively give them a pass, in the context of Control.

Congress could shut the Fed down in an instant -- that is the Control point.

That they are corrupt and defunct does not change that fact.

That We refuse to acknowledge that fact -- that is where the pissing in the wind and lost last chances come in.

Mon, 10/28/2013 - 09:01 | 4097127 GMadScientist
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So all we need to do is find a few hundred good men (or women!), get them duly elected, get the Feds charter revoked, end fractional reserve banking. Right.

(difficult to win a shouting contest with people who can print megaphones)

Or perhaps a new constitutional convention originated at the state level (RTFM!) would have a better chance at success?

(but these people can't even figure out they're being hoodwinked every four years)

Or just a campaign against the bankers themselves, not to "occupy", but to inform people enough that they can defend themselves from these behemoth leeches, nulling their influence from the bottom up?

(you assume they don't want to be as financially raped as the joneses)

Or just defend you and yours and hope others have the good sense to do the same?

(hopeless, unless you've networked with enough others to matter)

Perhaps some combination of all of the above.

(or not)

Sun, 10/27/2013 - 20:33 | 4096291 Renewable Life
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until the middle class in America finally wakes up to the fact that Central Banks in control, is nothing more then socialism run by bankers, as opposed to socialism run by the military, nothing is going to change!!!

Until then, it's BTFD to the moon, or PM and ammo........ Or do both!!

Sun, 10/27/2013 - 19:13 | 4096096 Seize Mars
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Deuteronomy 32:35

"Vengeance is mine, says the LORD..."

Sun, 10/27/2013 - 20:18 | 4096246 BigJim
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And CAPs too, apparently.

Sun, 10/27/2013 - 21:46 | 4096466 SubjectivObject
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Long Obsolete Reactionary Dogma.

Sun, 10/27/2013 - 23:52 | 4096728 Jumbotron
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Just die Greenspan

Mon, 10/28/2013 - 05:22 | 4096899 BringOnTheAsteroid
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Yes indeed, the lord is a vengenful mother fucker.

Mon, 10/28/2013 - 09:02 | 4097143 GMadScientist
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"The cheetohs are mine too, sayeth the Lord...so totally don't eat those, or you shall feel my wrath for generations."

(why you wouldn't want God as a roommate)

 

Sun, 10/27/2013 - 19:14 | 4096100 Iam Yue2
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There is of course one common theme; on each and every occasion the insiders bought the dip, and the sheeple got mugged.

Sun, 10/27/2013 - 20:06 | 4096222 Carl Popper
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But of course you state the obvious.

"the last duty of a central banker is to tell the public the truth.". Alan Blinder

Credulous sheeple are to be fleeced.

Sun, 10/27/2013 - 19:16 | 4096103 Professor Fate
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That is not the face of "Hubris".  That is just plain old "Bris".

Fate the Magnificent
"Push the Button, Max"

Mon, 10/28/2013 - 09:04 | 4097148 GMadScientist
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Don't wiggle, you're distracting the Mohel.

Sun, 10/27/2013 - 19:16 | 4096107 Son of Captain Nemo
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Kermit the Frog with horns, bifurcated tongue and a pitchfork.

Sun, 10/27/2013 - 20:07 | 4096226 Newfie
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I was thinking that picture looks like my dick after sex

Sun, 10/27/2013 - 22:20 | 4096553 Otrader
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lol.  make sure she doesn't see it after sex, or there won't be a next time.

Sun, 10/27/2013 - 22:27 | 4096575 americanreality
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More like "he". 

Sun, 10/27/2013 - 19:18 | 4096108 kaiserhoff
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Some great points in this piece.

Many of our problems date to Greenspan's panic reaction in 2001 to the 911 attacks.

Sun, 10/27/2013 - 19:21 | 4096117 ParkAveFlasher
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You really can go further back.  Events may accelerate the course but the end does not change.

Sun, 10/27/2013 - 20:01 | 4096209 putaipan
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and 911 was a cover up, literally buried under a million tons of wtc ruble, of the crimes of the previous 50 years...

Sun, 10/27/2013 - 20:10 | 4096229 Carl Popper
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Well. If we can secretly monetize two trillion in treasury bonds and make the evidence go poof then all of us won to a certain extent. All of us Mericans, that is. We would have been net way ahead if it werent for the cost of those two pesky wars.

Sun, 10/27/2013 - 20:11 | 4096234 putaipan
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yeah, well- "never let a good crisis go to waste" ... and on to the next crime wave.

Sun, 10/27/2013 - 19:18 | 4096113 TeamDepends
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No.

Sun, 10/27/2013 - 19:18 | 4096114 ParkAveFlasher
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Who do you believe in this amoral world?  

Sun, 10/27/2013 - 19:29 | 4096132 Winston Churchill
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Don't want to parse but immoral.They know damn well

what they are doing is wrong.They just DGAS.

Sun, 10/27/2013 - 19:46 | 4096182 ParkAveFlasher
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You are not parsing, you are asserting.  I would continue to assert for myself, that the laws of physics do not discriminate right from wrong, thus the world is inherently amoral with little pockets of human trust systems that can be further defined, within the subcontext of themselves, as moral or immoral.  Snowflakes have no morality.  They can't be trusted.

I completely agree.

Sun, 10/27/2013 - 19:21 | 4096120 no more banksters
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"At the beginning of last decade, when the towers of the World Trade Center collapsed during 9/11 attacks, the market suffered the biggest drop in history. Two weeks later, the “Enron” scandal revealed, and quickly became clear, that this was just the tip of the iceberg of a massive fraud from the corporations. Since the early 90s, many major companies were presenting fake profits, hiding their debts, with the help of the largest accounting firms. The paradox is that in the mid 90s, Greenspan had already realized that something was wrong with the economy, but ultimately convinced himself that computers were increasing the productivity in novel ways, too new to be detected in the data."

http://failedevolution.blogspot.gr/2012/07/the-illusion-of-self-regulati...

Sun, 10/27/2013 - 20:15 | 4096240 Carl Popper
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Yogi Berra is a lot smarter than Greenspan

"in theory there is no difference between theory and practice, but in practice there always is."

"Damn humans arent doing what I expect them to do," says a perplexed Greenspan lol

Sun, 10/27/2013 - 19:22 | 4096122 PaperBear
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And the soon to arrive currency crisis.

Sun, 10/27/2013 - 19:25 | 4096129 dcohen
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Greenspahhu, Yellenhu, Bernankhu AKBAR !

Sun, 10/27/2013 - 19:26 | 4096130 LetThemEatRand
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"We're just supposed to trust that they're good guys. Competent guys. That they know what they're doing."

It has nothing to do with trust.  The bankers own the country which is why the head of the Federal Reserve (a cartel of private banks) remains even when a politicians wearing a different Team color from the last one comes into office.

Sun, 10/27/2013 - 20:16 | 4096239 Jack Burton
Jack Burton's picture

Two Parties playing for the same team. Obama kept the Bush economic team on the job after winning an election in which he promised hope and CHANGE. Yet, a large number of people presist in claims that Obama is a socialist. Very odd! Then we see income disparity pushing high income earner's incomes to record level. No matter, "Obama is a socialist". Corporate profits make all time highs, while tax laws allow then to reduce their tax liabilities to all time lows. But still the same chatter "Obama is a socialist. Bank bailouts perfected under Bush were kept in place and the bailout liabilites passed onto the public. While the refrain "Obama is a socialist went on. The Federal Reserve got no pressure from Obama to change it's giant wealth transfer, from bottom to top, machine QE. Never mind "Obama is a socialist.

The point I am making is The supposed socialist president has presided over a policy that favors in every way imaginable the Bankers, Banks, Hedge Funds, inherited wealthy, the elite 1% who hold most equites, and others in the top income brackets. Their taxes are lower than in over 60 years, their incomes absorb all income growth due to productivity gains, they are in fact at a point of income disparity not seen since the 1920's and under Obama this income is growing at the fastest pace in modern history. That the president responsible for this can, with a straight face, be called a true socialist, shows you that both parties are the same, and the giant lie machine is busy trying to make people believe there is a difference, and that under Obama, corporations and the eltie wealthy are being robbed of their incomes and profits. My god, some people are fucking blind! Do they not GET IT???

Sun, 10/27/2013 - 20:18 | 4096248 dick cheneys ghost
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Right on.................but dont tell freddie

Sun, 10/27/2013 - 20:22 | 4096254 Carl Popper
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He is a statist socialist. The authoritarian kind that feels our "betters" should rule us. This includes the banking aristocracy and old money families which work hand in hand with useful idiots of the socialist persuasion to make sure all sheep are fed and watered. The shee are content but know not that they are to be fleeced.

Socialism in alliance with moneyed interests is thefascist model. It built great roads though.

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