tag:blogger.com,1999:blog-11719208.post1828856014323457955..comments2023-11-05T04:36:14.223-08:00Comments on The Mess That Greenspan Made: Maestro no moreTimhttp://www.blogger.com/profile/16530974968126497397noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-11719208.post-18329560242121954992010-03-22T05:14:27.421-07:002010-03-22T05:14:27.421-07:00To begin to understand some of the positions in th...To begin to understand some of the positions in this debate you have to begin to fathom the egos and arrogance of those involved. The former "Maestro" is a man who took pride in using incomprehesible jargon (and bragged about it in his book) to respond to the nation's leading law makers in mandated testimony. His "you're to stupid to understand why I'm doing what I'm doing" attitude was a huge part of the problem. It is sad today to see him actually try to explain in comprehensible language why what happened wasn't his fault.<br />Bernanke sees himself as the reincarnation of Benjamin Strong and is doing a vctory lap to take high fives for saving the world. He took the actions in response to the crisis Strong would have taken in the 1930s if he had lived. He cannot see that his roll as speechmaker Chicken Little in 2003-2005 was key in causing the crisis. <br />Greenspan and Bernanke would be the first to stand up and defend the setting of prices by the market yet relish the setting of the most important price in the economy. It takes a big ego and tremendous arrogance. Sadly the Chairman's position has morphed into a rock star position.<br />The failure of the former Fed chief to apparently fail to grasp the role of ARMs is embarrassing.Robert Wasilewskihttp://rwinvesting.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-83919805695162145652010-03-19T11:59:15.629-07:002010-03-19T11:59:15.629-07:00You wrote:
"This sort of defense of monetary ...You wrote:<br />"This sort of defense of monetary policy - including today's freakishly low rates - is only applicable to a world of perfect actors, perfect regulation, or some combination of the two and the most disturbing aspect of the combined Greenspan/Bernanke defenses is how they both continue to demonstrate how detached they are from this reality."<br />That sums it up nicely......DLPnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-24741908592592987392010-03-19T11:46:17.770-07:002010-03-19T11:46:17.770-07:00When Ron Paul asked Big Ben about the low rates ma...When Ron Paul asked Big Ben about the low rates magnifying the housing bubble, Ben's response was that rates are low now and there is no housing bubble. Its as if they just look at charts, and have absolutely no understanding of how ordinary people think. Warren B notes how Mr. Market is bipolar (sometimes exuberantly pushing prices up too high, and sometimes dejectedly pushing prices too low). Interest rates magnify the bipolar nature of markets. Low rates during a market euphoria (bubble) magnifies the bubble into a monster that can potentially destroy the entire economy.<br /><br />The "savings glut" was similarly made much worse by printing (adding forced savings to an already too high 3rd world rate). Since China et al had a dollar peg, the more the Fed printed, the more China et al printed. This put fantastic quantities of credit (voluntary savings plus forced savings) into the system. Much more than the market could profitably utilize for capital formation. That is, if there are too much overseas savings, printing just makes the situation much worse.Anonymousnoreply@blogger.com