The Pragmatic Capitalist
Aug 2, 2010
…and we continue to talk ourselves off the edge of the cliff. For the second week in a row Meet The Press trotted out the most financially incompetent of the financially incompetent and placed them on their undeserving pedestal.
Last week it was Tim Geithner, the veritable fox in the hen house of the financial crisis. This week it was Alan Greenspan, one of the grand orchestrator’s of our financial industry’s deregulation and the most vocal advocate of the virus that is neoliberalism.
This man has poisoned our economy for almost 5 decades (and he has admitted that his models were “flawed”) yet we continue to worship at the altar of Greenspan….It’s worse than the John Meriwether’s of the world who continually reopen hedge funds after driving the last one into the ground. What in the world is wrong with Wall Street and our financial system? Are we really so incompetent as a whole that we find it is okay to consistently reward and rely on those who have consistently failed us? Pardon my frustration, but this is beyond madness. Why do these people command such obedience?
This week, Mr. Greenspan was once again out discussing monetary policy despite the fact that he has already admitted his models were flawed. 20 years of mistakes and yet we still hang on his every word. Mr. Greenspan is still latching onto this insane idea that bond yields are going to spike as soon as the bond vigilantes awake from their slumber:
MR. GREENSPAN: Well, the problem there implies that the government has control over those rates, meaning the Federal Reserve and the Treasury Department, in a sense. There is no doubt that the federal funds rate, that is the rate produced by the Federal Reserve, can be fixed at whatever the Fed wants it to be, but which the government has no control over is long-term interest rates, and long-term interest rates are what make the economy move. And if this budget problem eventually merges to the point where it begins to become very toxic, it will be reflected in rising long-term interest rates, rising mortgage rates, lower housing. At the moment, there is no sign of that, basically because the financial system is broke and you cannot have inflation if financial system is not working.
This article was posted: Monday, August 2, 2010 at 6:12 pm