Greenspan does a 180.
March 16, 2004 10:09 AM Subscribe
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.
From my reading of the two articles, there doesn't seem to be a 180.
In both articles, from Feb and March, Greenspan has been adamant that raising taxes will be devestating for the economy. The change in his opinion had nothing to do with taxes, but rather in how well he percieves the economy recovering. As the economy continually improves, Greenspan changed his view that changing the age when one can can file for SS would be helpful. Since he has so much evidence of a strong recovery, he no longer sees it necessary to be that worried about SS.
Not sure I see a 180 as you call it. But that is just what I got from those two articles that were suppose to be basis of the post.
posted by Seth at 10:38 AM on March 16, 2004
In both articles, from Feb and March, Greenspan has been adamant that raising taxes will be devestating for the economy. The change in his opinion had nothing to do with taxes, but rather in how well he percieves the economy recovering. As the economy continually improves, Greenspan changed his view that changing the age when one can can file for SS would be helpful. Since he has so much evidence of a strong recovery, he no longer sees it necessary to be that worried about SS.
Not sure I see a 180 as you call it. But that is just what I got from those two articles that were suppose to be basis of the post.
posted by Seth at 10:38 AM on March 16, 2004
Why should Social Security benefits, which is a 15% tax on our wages and not considered a part of the federal income tax, be cut to pay for the irresposibility of government spending? If they cut my future social security benefits, will they cut the 15% that comes out of my wages for Social Security which is in reality paying for the general fund? That's just another bullshit shell game the government is playing. Why don't they just quiet spending as much money as they do? So what you're saying, BlueTrain, is you are supporting a 15% tax on people who make less than the social security maximum to help pay for government malfeasance? What they need to do out in Washington is to fix the problems, not create more.
posted by Eekacat at 10:54 AM on March 16, 2004
posted by Eekacat at 10:54 AM on March 16, 2004
A month ago our deficit and debt were becoming potentially hazardous to our future economic health. He suggests cutting future benefits to offset our financial worries. Now, even though nothing has changed, it's okay because the real estate and stock markets are increasing at a greater pace than our debt, and that's his argument for economic strength. He's banking on future prosperity, instead of focusing on fiscal discipline.
posted by BlueTrain at 10:58 AM on March 16, 2004
posted by BlueTrain at 10:58 AM on March 16, 2004
Greenspan, to give a simplistic but IMO reasonably correct view, is too old to be in his job and ought to step down. I think he lost it to a creeping partisanship post-9/11.
posted by billsaysthis at 10:58 AM on March 16, 2004
posted by billsaysthis at 10:58 AM on March 16, 2004
Now, even though nothing has changed
That precisely the point of the second article. Things have changed. Alan Greenspan is privy to all kinds of information that you and I are not. In his estimation, things have changed vis-a-vis the indicators he studies. Between those two speechs he saw some more positive things.
Was the point of this thread and your post to find out why Greenspan said on thing one month and something different the next? Well, the answer is evident in the second article. (Or were these articles a means to start a discussion so that you could make a point about the need to raise taxes?)
posted by Seth at 11:09 AM on March 16, 2004
That precisely the point of the second article. Things have changed. Alan Greenspan is privy to all kinds of information that you and I are not. In his estimation, things have changed vis-a-vis the indicators he studies. Between those two speechs he saw some more positive things.
Was the point of this thread and your post to find out why Greenspan said on thing one month and something different the next? Well, the answer is evident in the second article. (Or were these articles a means to start a discussion so that you could make a point about the need to raise taxes?)
posted by Seth at 11:09 AM on March 16, 2004
Alan Greenspan is privy to all kinds of information that you and I are not.
That's a valid argument? In that case, the war against Saddam's regime was completely justified. Surely they knew things that they couldn't tell us.
Was the point of this thread and your post to find out why Greenspan said on thing one month and something different the next?
Yes.
Well, the answer is evident in the second article.
The article states this: Mr. Greenspan's view is 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.
That argument doesn't hold water. Again, as I stated earlier in this thread, he's banking on future prosperity, instead of focusing on fiscal discipline, which is equivalent to a college student racking up thousands of dollars of debt because he believes that a job will be inevitable upon graduation.
posted by BlueTrain at 11:27 AM on March 16, 2004
That's a valid argument? In that case, the war against Saddam's regime was completely justified. Surely they knew things that they couldn't tell us.
Was the point of this thread and your post to find out why Greenspan said on thing one month and something different the next?
Yes.
Well, the answer is evident in the second article.
The article states this: Mr. Greenspan's view is 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.
That argument doesn't hold water. Again, as I stated earlier in this thread, he's banking on future prosperity, instead of focusing on fiscal discipline, which is equivalent to a college student racking up thousands of dollars of debt because he believes that a job will be inevitable upon graduation.
posted by BlueTrain at 11:27 AM on March 16, 2004
According to the Federal Reserve's most recent data, household wealth bounced back after the economic slowdown and hit a record at the end of 2003.
It's right there in the second article. The most recent data.
So your argument is that the Chairman of the Federal Reserve relying on the economic data available to the federal reserve and anyone else is somehow comparable to Saddam? Why don't you just go ahead and compare it to Hitler? Can we see how far afield you can take this?
As far as your suggestion that it is improper for Greenspan to project economic futures, do you reject all economists attempts to predict the economy? Are Krugman's predictions somehow more disciplined? Isn't ALL economic decision making based on predicitive models?
As far as your concern, take solace in the last line of the Krugman Time's article,
"But J. Bradford DeLong, a longtime Fed watcher at the University of California at Berkeley, cautioned that Mr. Greenspan had been right at times when many others were wrong.
"I think he's wrong, but he's got a better track record than I have," Mr. DeLong said.
posted by Seth at 11:43 AM on March 16, 2004
It's right there in the second article. The most recent data.
So your argument is that the Chairman of the Federal Reserve relying on the economic data available to the federal reserve and anyone else is somehow comparable to Saddam? Why don't you just go ahead and compare it to Hitler? Can we see how far afield you can take this?
As far as your suggestion that it is improper for Greenspan to project economic futures, do you reject all economists attempts to predict the economy? Are Krugman's predictions somehow more disciplined? Isn't ALL economic decision making based on predicitive models?
As far as your concern, take solace in the last line of the Krugman Time's article,
"But J. Bradford DeLong, a longtime Fed watcher at the University of California at Berkeley, cautioned that Mr. Greenspan had been right at times when many others were wrong.
"I think he's wrong, but he's got a better track record than I have," Mr. DeLong said.
posted by Seth at 11:43 AM on March 16, 2004
Seth - so you do like political posts! Anyway - "...As the economy continually improves, Greenspan changed his view that changing the age when one can can file for SS would be helpful. Since he has so much evidence of a strong recovery*, he no longer sees it necessary to be that worried about SS." - One would have thought that - as the God of fiscal prudence - Greenspan would be a champion of the "lockbox" approach to federal social security revenue. Instead, those social security payments of millions of Americans who, per Greenspan's earlier statement, might be stripped of SSI benefits will be used as general federal revenue.
Greenspan should be embarrassed. For shame!
trharlan - is it likely that the "mess" would have ameliorated so suddenly ?
*A "recovery", but for whom?
posted by troutfishing at 7:35 PM on March 16, 2004
Greenspan should be embarrassed. For shame!
trharlan - is it likely that the "mess" would have ameliorated so suddenly ?
*A "recovery", but for whom?
posted by troutfishing at 7:35 PM on March 16, 2004
Why do you gloomy Gusses hate America?
"I just read about a guy in America who lost his
job to India SOCIAL SECURITY PAYMENTS and he made a T-shirt that said, `I lost my job to India SOCIAL SECURITY PAYMENTS and all I got was this [lousy] T-shirt.' And he made all kinds of money." Only in America, she said, shaking her head, would someone figure out how to profit from his own unemploymentLOSING HIS SOCIAL SECURITY PAYMENTS. And that, she insisted, was the reason America need not fear outsourcing to India: LOSING THEIR SOCIAL SECURITY PAYMENTS: America is so much more innovative a place than any other country.
posted by swell at 9:45 PM on March 16, 2004
"I just read about a guy in America who lost his
job to India
posted by swell at 9:45 PM on March 16, 2004
"In the 1990's, Mr. Greenspan implored President Bill Clinton to lower the budget deficit and tacitly condoned tax increases in doing so. Today, with the deficit heading toward a record of $500 billion, he warns more emphatically about the risks of raising taxes than about shortfalls over the next few years.
On Monday, the nonpartisan Congressional Budget Office published new calculations showing that the budget deficit now stems almost entirely from tax cuts and spending increases rather than from lingering effects of the economic slowdown."
"According to the Federal Reserve's most recent data, household wealth bounced back after the economic slowdown and hit a record at the end of 2003.....But the main reason for that new wealth has been rising prices for real estate and stock" - I wonder if this is average household wealth and, if so, if the considerable and growing inequality in American wealth distribution - with so much wealth concentrated at the very top of the income profile ( a fraction of 1% ) - means that there isn't actually a logical fallacy or even an intentional distortion in Greenspan's representation of the balance sheets of the majority of Americans?
"the value of people's homes and stock portfolios have risen faster than their debts." - most Americans don't actually own that much stock, and many areas in the US are not experiencing strong increases in real estate values. I live in a real estate boom area, so Greenspan's calculus actually holds true in my case. But many Americans are not so lucky.
But, in any case :
Greenspan obviously no longer bothers with the unseemly appearance of partisanship. He doesn't even try. This displays, in my opinion, a startling contempt for the American public.
posted by troutfishing at 6:11 AM on March 17, 2004
On Monday, the nonpartisan Congressional Budget Office published new calculations showing that the budget deficit now stems almost entirely from tax cuts and spending increases rather than from lingering effects of the economic slowdown."
"According to the Federal Reserve's most recent data, household wealth bounced back after the economic slowdown and hit a record at the end of 2003.....But the main reason for that new wealth has been rising prices for real estate and stock" - I wonder if this is average household wealth and, if so, if the considerable and growing inequality in American wealth distribution - with so much wealth concentrated at the very top of the income profile ( a fraction of 1% ) - means that there isn't actually a logical fallacy or even an intentional distortion in Greenspan's representation of the balance sheets of the majority of Americans?
"the value of people's homes and stock portfolios have risen faster than their debts." - most Americans don't actually own that much stock, and many areas in the US are not experiencing strong increases in real estate values. I live in a real estate boom area, so Greenspan's calculus actually holds true in my case. But many Americans are not so lucky.
But, in any case :
Greenspan obviously no longer bothers with the unseemly appearance of partisanship. He doesn't even try. This displays, in my opinion, a startling contempt for the American public.
posted by troutfishing at 6:11 AM on March 17, 2004
Correction: March 17, 2004, Wednesday
A front-page headline yesterday about the views of Alan Greenspan, the Federal Reserve chairman, on debt levels in the United States characterized his position on budget deficits incorrectly. While Mr. Greenspan has urged Congress to avoid tax increases as a way of reducing such shortfalls, he continues to oppose budget deficits. He has not shifted his view.
Here is the speech about households debt. The Blair Times article is confusing, so it would be a good idea to see the source. Greenspan focuses on two measures:
- debt service ratio (measures the share of income committed by households for paying interest and principal on their debt)
- financial obligations ratio (incorporates households' other recurring expenses, such as rents, auto leases, homeowners' insurance and property taxes)
[B]oth the debt service ratio and the financial obligations ratio rose modestly over the 1990s. During the past two years, however, both ratios have been essentially flat. The debt service ratio has remained a touch above 13 percent, whereas the financial obligations ratio has hovered a bit above 18 percent.
[R]efinancing has allowed homeowners both to take advantage of lower rates to reduce their monthly payments and, in many cases, to extract some of the built-up equity in their homes. These two effects seem to have roughly offset each other, suggesting that homeowners might set a target for their mortgage payments as a proportion of income and adjust their borrowing accordingly.
troutfishing: while Greenspan does not like the bankruptcy rates metric, he does address inequality by differentiating between homeowners and renters. And do not worry, rising bankruptcy rates is a political signal!
For completeness, here is the current account speech.
posted by MzB at 10:00 AM on March 17, 2004
A front-page headline yesterday about the views of Alan Greenspan, the Federal Reserve chairman, on debt levels in the United States characterized his position on budget deficits incorrectly. While Mr. Greenspan has urged Congress to avoid tax increases as a way of reducing such shortfalls, he continues to oppose budget deficits. He has not shifted his view.
Here is the speech about households debt. The Blair Times article is confusing, so it would be a good idea to see the source. Greenspan focuses on two measures:
- debt service ratio (measures the share of income committed by households for paying interest and principal on their debt)
- financial obligations ratio (incorporates households' other recurring expenses, such as rents, auto leases, homeowners' insurance and property taxes)
[B]oth the debt service ratio and the financial obligations ratio rose modestly over the 1990s. During the past two years, however, both ratios have been essentially flat. The debt service ratio has remained a touch above 13 percent, whereas the financial obligations ratio has hovered a bit above 18 percent.
[R]efinancing has allowed homeowners both to take advantage of lower rates to reduce their monthly payments and, in many cases, to extract some of the built-up equity in their homes. These two effects seem to have roughly offset each other, suggesting that homeowners might set a target for their mortgage payments as a proportion of income and adjust their borrowing accordingly.
troutfishing: while Greenspan does not like the bankruptcy rates metric, he does address inequality by differentiating between homeowners and renters. And do not worry, rising bankruptcy rates is a political signal!
For completeness, here is the current account speech.
posted by MzB at 10:00 AM on March 17, 2004
So, BlueTrain reads one article written by someone who may or may not actually understand economics, and decides that he now knows more about this the Alan Greenspan, who is apparently "old" now.
And not only that, Greenspan changed his oppinion! OMG, it's only like his job to respond to economic changes.
Anyway, the whole "lockbox" idea is rediculous anyway. And what's the point of giving social security to someone with a million and a half in the bank for retirement...
posted by delmoi at 8:55 AM on March 23, 2004
And not only that, Greenspan changed his oppinion! OMG, it's only like his job to respond to economic changes.
Anyway, the whole "lockbox" idea is rediculous anyway. And what's the point of giving social security to someone with a million and a half in the bank for retirement...
posted by delmoi at 8:55 AM on March 23, 2004
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The budget deficit is ridiculously large, due to tax cuts and increased defense spending. Greenspan suggested cutting future SS benefits, which IMHO are a good start, but that idea didn't play well for either party or the public. Now, in a complete reversal of sentiment, Greenspan is suggesting that our economy is recovering nicely, even though personal and public debt are at an all time high. His response to these bleak perspectives? Real estate and stock markets, two extremely volatile markets, are "booming" faster than the debt is rising, and therefore, we have nothing to worry about.
Here in Pennsylvania, the city of Pittsburgh is bankrupt, Philadelphia is very close, and the state itself is bleeding money to the point where they want to legalize slot machines.
posted by BlueTrain at 10:18 AM on March 16, 2004