Alan Greenspan and the Economy

If Greenspan is in favor of it, we’re against it. No one man bears more responsibility for the present worldwide financial crisis and coming depression that Alan Greenspan.

The Fed’s job is to take the punchbowl away when the party gets too wild, said former Fed chairman William McChesney Martin. Greenspan did no such thing. As soon as the party began to quiet down and people began fumbling for their car keys, Greenspan added more rum to the punch and turned up the music. By the time the credit cops finally shut it down, people were dancing on tabletops all over the world.

And now, poor Mr. Obama has to deal with the headaches...

And it’s why the United States is now the largest Ponzi scheme in the world. The only way to pay off the old lenders is to bring in new ones – or run the printing press. That’s all lenders have to worry about – inflation. And for the moment, prices are going down. They’ll keep going down too – until they go up...

Now, Obama compounds the mistake…

When he signed the $787 billion bailout bill on Tuesday, he warned the nation that we’re not at the end of our troubles. “Nor does it constitute all of what we are going to have to do to turn our economy around,” he said. “But today does mark the beginning of the end.’’...

Stocks are still selling for 15–18 times earnings (which are falling fast). They need to get down to 5–8 times earnings. That will bring the Dow down to around 5,000, or lower. This could take a long time. We’re in a depression, remember. And in depressions economies need to be restructured, not just refreshed.

In the ’30s, none of the bailouts and stimulus packages of the Roosevelt Administration did any real good. At the end of the decade, the economy was about where it was when the decade began – with 11 million people still unemployed...

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My thoughts: The Dow (now at 7,500) could easily loss a third of its value this year or next. Inflation was being a worry since the Fed started cutting rates in September 2007 in an attempt to paper over the bubble. Hayek continues to be proven correct and is ignored while the government promotes Keynesian solutions that have never worked. What is the definition of insanity?