Greenspan’s Iron Law is that the sum of these two numbers is approximately constant, at least for the last half-century in the United States. That is a pretty fraught claim: it means that every time the United States adds a billion dollars to Social Security benefits or Medicare payments or unemployment insurance outlays we are forcing a billion-dollar reduction in family saving or in the retained earnings of business, or an increase in government deficits, or some combination of these. ... So what is the evidence for it? Nobel-prize winning economist Robert Solow finds Alan Greenspan's latest book to be ideologically driven and embarrassing, a pity for someone who, Solow writes, was, when looking at his whole tenure, a very good chairman of the Fed.
Today, while testifying for only the second time on Capitol Hill since the financial crisis began, [former Fed chairman] Alan Greenspan said the Fed closely monitored the subprime market [...]"I was right 70% of the time, but I was wrong 30% of the time, and there were an awful lot of mistakes in 21 years...". But Greenspan's defense of his record today rang hollow to many seasoned observers, if not downright deceitful.
Two new biographies examine the life and legacy of Ayn Rand. Johann Hari of Slate reads them both responds with a crystaline and scathing evisceration of Rand's philosophy based on the context of the events of her life. [more inside]
Originally, Greenspan was in favor of cutting future Social Security benefits to help ease the current budget deficit. Now, he suggests: that household balance sheets are "in good shape," and perhaps stronger than ever, because the value of people's homes and stock portfolios have risen faster than their debts.
Demography is destiny Alan Greespan in Senate testimony discusses the implications of an aging population. While the US is getting older, other countries are relatively young. Can immigration and technology provide, as Greenspan says, a "potent antidote for slowing growth in the working-age population," or are such projections academic?
Someone we trust says something reassuring. Fed Chairman Alan Greenspan, arguably the most powerful man in the world, blames "infectious greed" for the recent panic-like tail-spins on Wall Street, but says that the economy is on the way to recovery. One comment held that Greenspan was finally able to let out how he feels about what's going on, without shrouding his opinion in economic jibber-jabber.
"For once he really spoke his mind. He usually tends to obfuscate things quite a bit."But really, how many of you expected Greenspan to say anything other than "the fundamentals are in place for a return to sustained healthy growth"? Does Greenspan actually feel this way? Could it be that he is actually majorly pessimistic, but is using his soothing sweet-song voice and obvious clout and earned respect to somehow buck recent trends? Bush's speech didn't do much for our faltering economy, but will Greenspan's? Can one man's mere words possibly change the course of history? Well?
What do Greenspan, Enron and the number 11 all have in common? Economist and NYT colimnist Paul Krugman notes with not too much irony that "Just one month ago the James A. Baker III Institute presented Alan Greenspan with its Enron Prize." (a big wince over regretable timing, and the emphasis is mine) No big conspiracy here, but the general thrust of Krugman's column (NYT link) is that somethings got to give if things are to again get real (good). Lots of interesting under-reported economic factoids in the article make for enlightening reading.
The Fed surprises everyone with a 50-basis-point interest rate cut. (That's half a percent in lay terms.) The annoucement came out of nowhere, and the markets have gone nuts on the news: Dow up 4%, Nasdaq up 9%. But is this good news overall? I don't think it is; I think it means Alan Greenspan has data on the state of the economy that shows it's worse than everyone believes.
GWB sure seems happy. Wonder what Greenspan is thinking. Warning: not suitable for under 18.
Somewhere, people are saying, "This never happens to Alan Greenspan."