The Demented "Old Normal" Speaks: Greenspan Forgets His Lines From Year Ago, Now Hearts QE
Forget 'irrational exuberance', forget 'deregulation of derivatives', Big Al is back and this time he seems to have forgotten any- and every-thing we has ever said. It was only a year ago that Greenspan told CNBC "I am ill-aware of anything that really worked. Not only QE2 but QE1" and yet today the mumbling-'maestro' pronounces, via Bloomberg:
- *GREENSPAN SAYS EQUITY STIMULUS IS HELPING TO DRIVE ECONOMY
- *GREENSPAN SAYS EQUITY STIMULUS IS UNDERESTIMATED
- *GREENSPAN SAYS EQUITY IS COLLATERAL OF FINANCIAL SYSTEM
So it sounds like Alan has joined Ben in the parade of 'the-market-is-the-economy' thinkers as now the critical action of all the greatest minds in our economic policy-makers are convinced that debasement manufacturing a rising equity market (by whatever means necessary) is key (and nothing else!) though his schizophrenia was completed during his interview with Bloomberg's Tom Keene just minutes ago:
"The first thing we do is stop doing what we are doing." Says leave markets alone and let them work.
Greenspan also added, for sincerity, that:
- *GREENSPAN SAYS THERE IS A `HUGE FISCAL CLIFF'
- *GREENSPAN SAYS `INTEREST RATES ARE LOW BEFORE THEY GO UP'
But it appears we should not worry about any of that, since:
- *GREENSPAN SAYS STOCKS ARE `CHEAP'
The piece de resistance, confirming that once one passes 70, one should never leave home without their favorite antipsychotic medicine:
- GREENSPAN SAYS GLOBAL SAVINGS PUSHED DOWN LONG TERM RATES
- GREENSPAN SAYS HOUSING BOOM WASN'T AN AMERICAN PHENOMENON
- GREENSPAN SAYS LOWERING RATES IN 2003 WAS RIGHT THING
- GREENSPAN SAYS LOW FED RATES DIDN'T FUEL HOUSING BOOM
Is it any wonder Paulson & Co got eviscerated listening to this.
Recall from CNBC in July last year:
"The former Federal Reserve Chairman stated in a CNBC interview that the Fed’s quantitative easing programs under Ben Bernanke have done little to increase lending and stimulate the U.S. economy. ”There is no evidence that huge inflow of money into the system basically worked. It obviously had some effect on the exchange rate and the exchange rate was a critical issue in export expansion. Aside from that, I am ill-aware of anything that really worked. Not only QE2 but QE1.”
Going forward, Greenspan said he “would be surprised if there was a QE3? due to the damaging effects it could have on the value of the U.S. dollar."