Mr Greenspan said [...] that he would not be surprised if the fall was in double digits.
Since that's ALREADY THE CASE in many urban areas throughout the nation, how is this an "alert on US house prices", as the article headline would have us believe ?
Perhaps they should have entitled it "Greenspan reads newspaper, reacts".
His CYA is killing me. If froth was a euphemism for bubble, how could he have said "I see froth, but no national bubble." Was he trying to be sly and make the regional bubble argument? Here are some definitions for him :
1 a : bubbles formed in or on a liquid : FOAM b : a foamy slaver sometimes accompanying disease or exhaustion
I suppose the mortgage market was superliquid, yes. And yes, it does now look to have been diseased and near exhaustion.
So is he saying he didnt get it that the same factors creating the "froth" in the regional bubbles had infected all areas of lending?
Please, someone, anyone, just make him go away... can he be bribed to shut up? What, the advance on the book wasnt enough??? UGH!
That's humorous. Single-digit declines, maybe low double-digits? Average home prices in my state (California) went up 400% in the last 10 years. Going down by 5-20% is nothing, a mosquito on a bull's back. It would have to be as 'big' as this just to be (barely) noticeable on the 50-year price chart. Greenspan guessing whether this decline will be 35-45% or 45-55% would be more newsworthy. Thanks for the info, though, CR
Greenspan needs to think about entering a monastic order with strict vows of silence.
His advice to people to go out and get variable-rate mortgages struck me at the time as amazingly irresponsible, and appears even more so in retrospect.
Greenspan will be responsible for about a two percent drop in the dollar this week- any disagree?
Geez, first he can't see 'em, now they are everywhere.
I can hardly wait for the rest of America to see them. Double digit drops are going to be common in the frothy parts of America? Well, tell me something new.
The other article about long term inflation should be sending shivers down the spine of whomever gets elected president in thirteen months.
Greenspan will be responsible for about a two percent drop in the dollar this week- any disagree?
I think if the Fed cuts rates there's a real danger of capital flight and a dollar crash.
I would be StagflationAllen, but for Mark;-}
Well, there's just not much evidence of inflation in the sense of the money supply expanding.
I'm bearish on the dollar because I think unrestrained speculation and expansion of credit (not money supply) is destroying our economy's capacity to create wealth in the future.
It will be interesting to see if Ben agrees and has the guts and political clout to act on those views.
Or does that sound too much like some sort of German WWII top secret anti-tank weapon? I'm telling you though, we could use an anti-tank weapon these days because I'm not all that confident the helicopters are going to do the job.
We take a guy with a 3rd grade education who breaks the law and we put them away with the "no excuse for not knowing the law" charge.
We let a guy with a PHD, who got paid to study further in the field, create the problem, ignore the problem, basically negligent, make huge profits from book sales. Is Alan G any different than OJ?
How bout a split screen of Greenspan, the left side showing the video of when he called the bottom on housing...what back in late 2006 I think,
and the right side showing this interview where he states the obvious, that housing is still falling.
Think any network news will do that?
If they are going to put so much into what he says, don't we deserve the right to hold him accountable on his past statements.....in least in the interest of full disclosure!!?
Any news agency that DOESN'T mention his prior call is a no more than a parrot.
"Critics say the Fed should have tried harder, raising rates sooner and faster. Mr Greenspan counters that that would not have been acceptable to the political establishment given the very low rate of inflation. He says the presumption that we were fully independent and have full discretion was false. "
Urgh. I was reasonably sure the Fed and BoE would cave eventually, but I figured they would maintain the fiction of independence until there had been a few months of recession and the politicians forced them to lower rates in the face of above-target inflation, and I figured they would hold out for a face-saving month or two after the public pressure was obvious.
Apparently they have already caved, and in fact have never had any meaningful independence.
How did that happen?
Maybe it's time to increase the percentage of gold in my portfolio from recklessly enormous to stupendously insane.
In the 70s wages were rising rapidly in terms of dollars. That doesn't appear to be happening now.
Contrast this with China which I do think has a serious problem with inflation (including the "wage price spiral") and to me looks a lot more like the US in the 70s than the US in 2007 does.
That fact that Japan still has deflation also suggests to me that inflation in other countries doesn't necessarily get exported to other countries.
I think our wage spiral is and has been headed off to China.
I would also argue that if China had ALL our manufacturing and service jobs that things would no longer be cheap for us. We keep sending them paper, and they keep sending us goods.
How long it can keep going on I have no idea (even if I am right to think this way).
Maybe it's time to increase the percentage of gold in my portfolio from recklessly enormous to stupendously insane.
That is funny on so many levels. Being a risk straddler, I cannot endorse your opinion but then again I cannot heckle it either, lol.
It also explains why I like this site so much. The powers that be (CR & Tanta) seem to foster a certain level of UberNerdiness and good old fashioned humor.
Alan seems likely to putting the last nails in the coffin of his reputation. Has there ever been an exit of a central banker with less finesse and dignity?
I would also argue that if China had ALL our manufacturing and service jobs that things would no longer be cheap for us. We keep sending them paper, and they keep sending us goods.
I don't disagree with this - that's why I'm bearish on the dollar. I guess it's a techinical distinction on whether you call this inflation or not, but I don't.
The flip side is that I don't think the Chinese consumer has the political clout or wealth equality with production to take the place of the US consumer in the Chinese economy.
If the US has a serious recession, China could suddenly find itself in oversupply hell - including all the mass unemployment and falling prices that might go with.
Our whole global economy is misconfigured. It's hard to tell exactly how it's all going to work out. A lot of that depends on decisions that have yet to be made.
Greenspan:
'froth was a euphemism for a bubble and all the froth bubbles add up to an aggregate bubble.Now its clear;he realy did tell us there was a housing bubble and we were to stupid to see it.
I didn't pay close attention back then (I was a teenager) but I don't remember Volker hogging the limelight after he stepped down as Fed Chairman quite so much.
When you hear companies tapping out, when you see stockholders acting like raging bulls, when you see frightened fund managers who lost everything they own and the reputations to boot taking flying lessons without any interest in the chapters on landing, and when you hear J6P saying, "Never again will I touch RE", then...that's capitulation.
Until that time, this is merely the prelude.
Neil...how about popcorn for all? It's gonna be a long symphony.
US BANKS TOLD TO PLAY STRAIGHT WITH BOOKS
"One of the world's most senior accountants has warned Wall Street's major investment banks to stick to the rules when they report their third quarter results this week."
I dunno... stock prices were exploding at the beginning of the Great Depression - that kind of separation from realitiy is a clear sign that the financial system is disintegrating.
the GS interview just is pathetic on so many levels; I mean, ouldnt his younger supposedly more media savvy wife talk him out of it? a very bad day for us.
He could help the world by talking frankly about what deflation will do, and the damage to expect, and especially, the length of time it can/may/might take for the froth to drop to a skim on the greedy risk takers lattes.
Paul Kasriel, chief economist at Northern Trust in Chicago, has been one of the lonely voices of despair over Americans' personal finances. For example, Kasriel wrote in 2004 that inflated housing prices created only an "illusion" of national wealth. "In recent years," he said, "growth in our capital stock has slowed and the composition of the slower growth has moved in favor of McMansions and SUVs, which do little to increase the productive capacity of our economy."
The following year, Kasriel wrote another essay titled, "Households Still Running on Empty!" In it, he challenged popular arguments that personal income has been underestimated because of the way contributions to private pension funds are counted. His bottom line was that household borrowing in recent years had risen relative to household spending, and that household spending represented a record 76 percent of gross domestic product.
Today's "partying," he said, would lead to tomorrow's "hangover." So here we are: The partygoers have downed a bottle and still they can avoid a hangover.
Well.. I watched (thank god for DVRs) his interview with 60 Minutes. Not much for any UberNerds but for romantics ( and yup I can occasionally rise to that ) his wooing of Andrea Mitchell is really rather sweet.
OK. that's enough sweet interludes. Let the stoning resume.
"No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time." Calvin Coolidge, US President, 4 December 1928
"There is nothing in the situation to be disturbed about." Andrew Mellon, Secretary of the Treasury, February 1930
"Gentlemen, you have come sixty days too late. The depression is over." Herbert Hoover, US President, June 1930
"...how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions...?" Alan Greenspan, December 1996
"...the fundamental underpinnings of the recent US economic performance are strong ... the new technologies and the optimism of consumers and investors are supporting asset prices and sustaining spending." Alan Greenspan, February 1999
Stephen King is managing director of economics at HSBC
Unless you were in Greenspans position, I don't think any of us really know what the objective is inside the fed based on political pressure. Now that he is no longer the Fed Chairman I am sure his vocal opionions have changed based on his freedom. I understand most people do not like Greenspan but I do think some of what he is talking about today is important to note.
Of course, some professions thrive in tough economic times. Business should be brisk for bankruptcy lawyers. And we will need auctioneers to help unload foreclosed properties.
This should really help keep the economy out of recession. The "bankruptcy boom" might well lead to another surge in asset prices, especially stocks.
The "bankruptcy boom" might well lead to another surge in asset prices, especially stocks.-ac
although al the bulls will agree with you ac, i don't. btwn 2001-2003 the Fed slashed rates from 6 to 1% and the Nasdaq dropped 50% during same period. of course all the money flows went to RE and todays argument is that there is no other place to go except stocks so keep the good times a rollin'. i expect at least another 10% pullback before that scenario might just play out b/c we have USD index at 79, oil at $79, gold at 714, wheat at $9 and M3 at 14%.
money supply depending on how u look at it might be stable but one needs to add in credit growth which is why i like M3. credit is money these days and this has been leveraged way to the upside. Northern Rock and CW are just the beginning. the string of credit crises beginning with New Century until now will escalate IMO.
His advice to people to go out and get variable-rate mortgages struck me at the time as amazingly irresponsible, and appears even more so in retrospect.
Seriously. He was either woefully stupid or outright evil.
He used to be a Rand-disciple gold-standard guy and he is calling out the republicans for abandoning their roots?
After the obvious comic value, the second best reason I would vote for Ron Paul is that there is a good chance he would arrest Greenspan and give him the public whipping he deserves.
it really is amazing he's coming out with all of this now. after all those yrs of Greenspeak, this is what he was really thinking. this will make things very difficult for the Repubs to put pressure on the Fed and esp. BB. calling for inflation as he has, i think it makes it harder for BB to aggressively slash interest rates for if inflation soars as Greeny has warned, BB will be taken out to the woodshed.
It's not a great read really, but it does have a choice bit where
"P. Brett Hammond, chief investment strategist at the New York fund manager TIAA-CREF" has a recommendation...
"consider a nontraditional refuge: real estate."
To be a little fair he means REITs, and commercial ones at that, but still from the charts that CR has put up, and the comments about the mid-west it seems like a pretty reckless recommendation.
"[W]e may not have a huge run-up in office demand, but we have not had a huge run-up in supply."
BTW I apologize, if the previous post was off topic, and this even more so...
StagMark and StagAllen-
I've tried to hedge the $ decline by buying un-hedged foreign bond funds (mostly european and some asian treasuries). It seems like the right first play in a stagflationary scenario. If the dollar falls (due to an economic stall or direct inflation), they'll rise and the foriegn central banks should lower their rates and improve return a bit more.
Does this seem like a reasonable low risk strategy or is there some hole in the logic. I'm pretty sure foreign stocks are not a great buy, if the dollar plummets, and anything in the US (where most of my assets will remain anyway) is likely to decline in value. I'm wary of gold (although I might by some funds in a tax advantaged account).
Please remember your fiduciary responsibilities ;^)
Every homeowner, who lost his house after hearing advice from Greenspan (about ARM), should make his dog assrape Greenspan.
Greenspan's book should be taken away by federal judge (like OJ's book) to pay for his crimes. Motherfuckers like him should not be allowed to go on national TV to push more propaganda.
what strikes me is his "need to seek approval" in response to Stahls question about Rands claim he was a social climber. i think his book is just that; he feels guilty about his monetary policy and wants to make up to the American public thru this book.
The London Times article is worth the ... time to read:
"In financial markets, it is usually a mistake to follow any line of argument to its logical conclusion, because unpredictable events or interests usually intervene to turn a crisis or a triumph into some kind of fudge. But every few years, a market somewhere gets the bit between its teeth and goes all the way Wall Street in 1987, the ERM in 1992, Russia in 1998, internet stocks in 2000. When this happens, Darwinian logic of short-term survival takes over and events move much more quickly than anybody expects."
To be a little fair he means REITs, and commercial ones at that, but still from the charts that CR has put up, and the comments about the mid-west it seems like a pretty reckless recommendation.
If I really started getting worried about the dollar I might look into rural land or even housing in a depressed area.
I just think the traditional refuges are all juiced up on easy credit. You gotta find something that nobody wants but that still has intrinsic value.
"this will make things very difficult for the Repubs to put pressure on the Fed and esp. BB."
There are already some signs that political scrutiny is rising. Democrats including Barney Frank of Massachusetts, who heads the House Financial Services Committee, called last week for a ``meaningful'' cut in interest rates.
Democratic Representative Carolyn Maloney of New York said the same day it was ``no longer a question for the Fed.''
These politicians are all in this together Repubics and Demoncrats a like. Inflation is always politicaly more palatable then depression for both parties.
i think he craves attention. former jazz band players marries high profile news reporter, can't stop talking and roiling mkts immediately after stepping down as chairman, calls for 1/3 chance of recession in Feb, calls for Chinese stk mkt selloff, publishes scathing book on current administration, and calls for high inflation and further housing decrease. interesting character.
There are already some signs that political scrutiny is rising. Democrats including Barney Frank of Massachusetts, who heads the House Financial Services Committee, called last week for a ``meaningful'' cut in interest rates.
The addicts are begging for another hit.
Rate cuts are the whole reason we're in this mess. Somebody needs to communicate in a "meaningful" way that rate cuts are making the economy worse, not better.
Rate cuts have been destroying the capacity of the US to create wealth for 10 years now.
NR: Financial watchdog launches investigation into which bank might be next
Thats all fine and good, but... which banks are on the receiving end of the deposits being transfered out of NR ? Someone, somewhere must be reaping a windfall from NR's bad luck.
Every homeowner, who lost his house after hearing advice from Greenspan (about ARM), should make his dog assrape Greenspan.
Greenspan's book should be taken away by federal judge (like OJ's book) to pay for his crimes. Motherfuckers like him should not be allowed to go on national TV to push more propaganda.
Remember that new jets are something like 30% more fuel efficient per passenger mile... so it would probably be a good thing to look at that stat carefully.
Greenspan said in the interview he was in favor of a tax cut, just not Bush's tax cut. he said the cuts have lasted too long.
i agree that rate cuts will be throwing gas on the fire. CB's never learn. there are so many recession indicators flashing red or rolling over its hard to list them all. i think the burden of proof lies on the bulls to believe the stock mkt can keep pushing up thru all these dangers based solely on the irrational speculative liquidity argument. remember the Nasdaq continued to drop 50% btwn 2001-03 despite rate cuts from 6 to 1%.
Actually, my recollection is that jet fuel consumption was down in 2006 from 2005 slightly, just as was overall gas. But through June, it was up YoY Ytd in 2007 by .9. Maybe that changed this summer. Volume, not price.
He said the price of risk had fallen to unsustainably low levels beforehand, with investors addicted to asset-backed securities that offered some additional yield over Treasury bonds as if they were cocaine. Mr Greenspan said this demand induced the big increase in the origination of subprime mortgages by mortgage brokers.
This is absurd. Central bankers MANIPULATE the price of risk. As usual, they point to the problem but never mention their own culpability in the outcome.
I can't imagine AG's 60 min interview inspiring confidence in the global or US economies. Might even cause a few jittery investors to sell? AG's diversified across several currencies, are you.
OK and then the treasury dept or some new government sponsored organization would be created to take their place, a government will always use the hidden tax of inflation with printing press money FED or no FED.
Sorry dr strangemoney but them's the facts you know that.
remember the Nasdaq continued to drop 50% btwn 2001-03 despite rate cuts from 6 to 1%
Two things to remember:
(1) Cut/increases have a substantial lag... something like 18 months. The effects start taking hold 6 months after a cut but aren't fully felt until 18 months or so.
(2)Markets aren't the real economy. They are mirrors of the economy.
CBs should (and mostly do) focus on jobs, GDP growth & prices. Lets hope BB does - if so he'll find it hard to come up with an excuse to cut.
"Maybe it's time to increase the percentage of gold in my portfolio from recklessly enormous to stupendously insane."
I took mine from "excessive" to "kinda stupid" last month.
As for buying land to live off, that's overrated; it's not so easy, takes a lot of time and energy and a real learning curve. If you're really worried about the end of the world as we know it -- and I'm not -- just be in a good ag area with a lot of truck farmers, especially organic growers who get by without chemical fertilizers and pesticides. Yeah, I'm not worried about the end of the world, but guess where I am?
Has anybody read Greenscam's memoir yet? I have just one question and am wondering whether he mentioned it in his book. The question - does he still have sex?
As for buying land to live off, that's overrated; it's not so easy, takes a lot of time and energy and a real learning curve. If you're really worried about the end of the world as we know it -- and I'm not -- just be in a good ag area with a lot of truck farmers, especially organic growers who get by without chemical fertilizers and pesticides. Yeah, I'm not worried about the end of the world, but guess where I am?
Well for the record - I live in one of those areas and if you plan to be supplied by those truck farmers you still have to have something those folks want if you are going to trade with them... and when everyone is cold & hungry gold doesn't feed you or keep you warm. It too will have marginal utility in a scarcity driven world.
If you want something to trade with them - learn how to fix machinery - shade tree engineering will be in huge demand, always is. They might only be able to trade you chickens for your labor but you can eat chickens.
Secondly if you depended on gold when the EOTW comes - you would have to protect the gold. That requires a learning curve all its own. Now while it is easier to run away with & hide gold it is a lot easier to GUARD land - it isn't going anywhere and if its yours you know it better than anyone.
Dobbs I agree with everything you said - but owning productive land is still one of the best ways to survive economic hardship. Better than owning metal by a country mile in my estimation.
Has anybody read Greenscam's memoir yet? I have just one question and am wondering whether he mentioned it in his book. The question - does he still have sex?
Troll Brothers | 09.17.07 - 1:04 am | #
My fear is that if inflation picks up here it could very well infect the world (again) and truly turn into a race to the bottom (again). I therefore wouldn't necessarily count on interest rates falling worldwide (except for a possible short-term recession such as in 1974).
Of course, this is not investment advice. It is YOUR job to figure out where we are in Figure 5. There are four choices and although all are possible I lean towards a certain corner long-term and possibly another corner short-term. I'm investing for the long-term though, so that's where I sit.
"As for buying land to live off, that's overrated; it's not so easy, takes a lot of time and energy and a real learning curve."
I bought a small farm in Nebraska after I cashed out in CA in 05. I got it for 25% off the asking price and had been on the market for 3 years. I produce what I need for my own consumption but I have the time to do it. I also have had 3 calls this year from people wanting to buy the property from me. It's not for sale. The learning cure isn't that steep if you have good neighbors and a good internet connection.
Democratic presidential candidate Hillary Rodham Clinton is unveiling a sweeping health care reform proposal Monday that would require every American to carry health insurance and offer federal subsidies to help reduce the cost of coverage.
Well for the record - I live in one of those areas
and if you plan to be supplied by those truck >farmers you still have to have something those >folks want if you are going to trade with them...
Well, tell you guys, it is not going to be gold or silver or even oil that will be most precious in this depression. You know what will be? You cannot figure out by comparing with previous depressions, because that thing did not exist before.
The commodity most valuable this time around will be 'viagra'.
Holding metal is a means to store value until a correction is over. Owning productive land, or tools/equipment, is the means to plod through a period where the value of currency is questioned and barter/exchange rules the day.
Putting 100% in metal is silly, but it should be viewed as a savings account. It will come in handy to barter for large items (ie equipment, land, etc) where the quantity of demand goods (grain, chickens, bullets, etc) is too great to manage for the exchange.
Money is what people accept as a medium of exchange. Fiat currency is what the government labels as "money".
" With a price tag of about $110 billion per year "
Would this result in a reduction in total costs the US workers and corps pay to the insurance companies now?
Why even bother going thru insurance companies at all? Just refinance medicare (ie, reconfigure its funding), make it available to all. The end result would be cheaper.
The problem with healthcare isn't funding, it's cost containment. The idea that everyone is entitled to an MRI every time they stub their toe will never be sustainable.
'Denouncing the tax cuts brought in by Mr Bush, Mr Greenspan says the Republicans deserved to lose the congressional elections last November because they abandoned fiscal discipline and hugely swelled the US budget deficit.
He says he was surprised Mr Bush was unwilling to temper his campaign promises with fiscal reality once elected in 2000, as previous Republican administrations had done.'
What the gold debate misses is taxes.
Money has value because the IRS requires it. As do state treasuries. So after bartering you have to convert back to currency anyway, or go to jail.
As long as taxes are paid in currency, the currency will have value.
Gold? It may go up, it may go down. But gold will never be the medium of exchange in markets that pay taxes.
"If you plan to be supplied by those truck farmers you still have to have something those folks want if you are going to trade with them... and when everyone is cold & hungry gold doesn't feed you or keep you warm. It too will have marginal utility in a scarcity driven world."
I honestly don't think it's going to be that bad. We don't have a shortage of resources, just misallocation and underutilization. Oil may get scarce, but energy is plentiful if we put 1/10th the effort we put into Iraq into harnessing it.
As for me pooh-poohing the farming life, it's just because I know I'd be bad at it. Also, we're socialists around here, and there's a lot of good farmland and people who know how to use it. Come a real societal breakdown, they'd commander the corporate ag land -- mostly in strawberries, 'chokes, and brussels sprouts, and probably would fall out of use anyway -- and get a ton of unemployed volunteers to farm it. College kids and surfers -- which we have plenty of -- are good for something, and the Latinos know what to do.
Remember, people didn't starve in the depression because there wasn't enough food. They starved because there was no economic basis for getting the food from the farm to the city.
"Dobbs I agree with everything you said - but owning productive land is still one of the best ways to survive economic hardship. Better than owning metal by a country mile in my estimation."
Sigh. I just can't go there. My wife is chronically ill, unable to stand up to a hard life or to live a decent life without regular medication. I can't plan for that self-sufficient, insular lifestyle in case of societal breakdown, even if I wanted to , because she probably wouldn't survive it. So should the worst happen -- and I still don't think it will -- we're casting our lot with our town full of old hippies, dreamers academics, and selfish yuppies. I was proud of how they all pulled together in the aftermath of the earthquake here many years ago, and I have faith in them still. And frankly, I have no choice but to do so.
As for guarding gold -- well, you don't have to guard it hard if no one knows you have it. And you don't let them know that you do until you're ready to use it in a big way -- to buy an income-producing resource, for example. I'm a socialist, but I've got the peasant mentality down pat, too.
Farmland needs guarding, too, frankly. Pilferage, animals, etc. And if you're far enough out to be away from the hungry crowds, you're also very, very alone. And there is danger in that.
So in a societal breakdown -- again, I don't expect it -- I'd stay a socialist inside the walls of my small city. With a peasant's gold stash for life's little emergencies or opportunities.
No way could I survive the back-to-farming life. I am pushing 70 and although I'm in good physical condition for my age, a hard physical life like that would be the end of me.
I get a feeling that the people who claim that when times get really bad, no one will want gold, have not held a 1 oz gold coin in the hand recently(ever?), and maybe are just plain cowards, afraid to store their wealth in something(honest money) so neglected by our modern society, and seen as an "ancient relic."
Saying that, I believe that knowledge, skills, tools(broadly speaking), and location may be the right things to worry about at this time.
Greenspan takes the typical Zionist line on Iraq. It wasn't about Israel, oh my no, it was about oil. But what he doesn't explain is why Japan and China that are more dependent on Middle East oil than the US never felt it necessary to try to control the area militarily. Or why an Iraq exhausted from the 1991 war would be any threat to oil from the region. The war in Iraq was done to please the Neocons who represented Israel and their warmongering allies in the Pentagon. It was not because of oil. And this is also the view of Mearsheimer and Walt who take a very objective view of the matter. Unlike AG.
Democratic presidential candidate Hillary Rodham Clinton is unveiling a sweeping health care reform proposal Monday that would require every American to carry health insurance and offer federal subsidies to help reduce the cost of coverage.
With a price tag of about $110 billion per year
Would you prefer to spend it on a pointless war in Iraq, Kevin?
"I know he said Republicans have lost their way due to the deficits but I have never heard him say anything bad about the tax cuts."
He claimed that his support for tax cuts was linked to triggers that would revoke them if certain economic conditions came to pass, but that Congress forgot the triggers. For that he was called naive by others.
WASHINGTON: Two days after predicting that U.S. forces in Iraq might be reduced to 100,000 by the end of next year, Defense Secretary Robert Gates said Sunday that American troops were likely to remain in that country for a "protracted period." He also said he would recommend a presidential veto if Congress approved a Democratic effort to limit the time troops could spend in Iraq.
Meanwhile Hillary proposes a billion dollar health insurance program.
The US is heading for a guns v. butter problem during the next ten years. Does it want to be a world controlling empire, for the benefit of a coterie of imperialists, or a place that is decent and good to its citizens?
But what he doesn't explain is why Japan and China that are more dependent on Middle East oil than the US never felt it necessary to try to control the area militarily
Does that question even need asking? Because first the British, and then the US, firmly had the region under their sphere of influence and miltary control.
Note that the Japanese did conquer (temporarily) Malaysia and the Dutch East Indies (Indonesia), largely for oil. That's WWII, in case you forgot.
And lastly, China was in no shape to exercise military force overseas during the 20th century, and still isn't. Actually they never did even when they had the means, they just weren't interested.
"If the US has a serious recession, China could suddenly find itself in oversupply hell - including all the mass unemployment and falling prices that might go with."
AC- The demand for Chinese consumer goods that are exported to the US could easily be filled by China's 1.3 Bln people. The Chinese gov. will have to act to prevent a deflationary cycle if US demand for Chinese goods suddenly dries up. This action could be extremely loose monetary policy coupled with temporary deficit spending on infrastructure and other public investments to ensure there is domestic demand for Chinese produced products.
I believe a dollar collapse would benefit the standard of living for the average Chinese (Lee Six Pack?) given an appropriate Chinese gov. response that enables the surplus of consumer goods to be consumed domestically.
Would you prefer to spend it on a pointless war in Iraq, Kevin?
Yes.
Societal breakdown? You people are scaring me.
Don't let the nutters scare you. They are on every site that posts even one less-than-bullish financial article.
That said, a working knowledge of firearms and a good social network of family and friends are rewarding things in their own right and are useful if the unthinkable occurs. Which it won't.
As an aside, apologies for my earlier ungentlemanly vulgarity. Greenspan really, really pisses me off.
So you would prefer to spend billions on the Iraq war than on proper medical care for all Americans? Then, tell me what benefit the Iraq war has brought to America so far? I mean aside from the benefit of almost 4000 dead soldiers and many thousands crippled for life, not to mention the billions, maybe a trillion, in debt?
Nixon understood the situation in the Middle East. Those nations have nothing to sell but oil, so they will sell it. We don't need to occupy them militarily to get it. Why would they not sell it? The idea that we must control them militarily to get the oil is nonsense.
Gold, OTOH, is anonymous, untraceable, easily hidden and covertly transported, not to mention malleable and divisible.
IE stealable.
The land is still there - it ain't going no where. Plus you eat from the land. Hard to beat that - appreciates in value and it feeds you.
I personally don't know anyone who got rich owning gold - I know plenty of people who got rich then BOUGHT gold. You know how they got rich? Many of them through owning land first. And they still own the land - or a lot of it.
Dryfly, I love your posts. But farming for sustenance? Even farmers can't reliably do that. Re my post about my grandfather in the Dustbowl, no one knew farming better than him. Moved to N.J. and the boulders got him. Still barely sustenance. Here in NH we have such short growing seasons, you not only have to have an ideal season, you have to know how to store for the next 11 months. I'd love to go off the grid, but have found by experience it's more practical to read about it than do it. Fun to try, but unless you're really a granola, good luck.
Dryfly, I love your posts. But farming for sustenance? Even farmers can't reliably do that. Re my post about my grandfather in the Dustbowl, no one knew farming better than him.
Outsider - the thing about good income property land is it can do BOTH. It can produce decent income and appreciate in value while times are good and should the world go to hell it becomes a refuge like no other.
The only exception is of course a major war - if you held land in Poland in 1938 you were SOL. But gold didn't help you much either unless you got out well before 1938... before the Blitz.
Seriously I do NOT expect the end of the world but if I did I certainly would not want to be in a suburb or urban setting... with or without gold. You'd need a personal army to protect yourself & your stash - one well armed individual with a small fortune in easily stolen loot in that environment wouldn't cut it.
That has been my point all along. If people really think the wheels are falling off then they should act like it & prepare wisely - own land they can work & defend - otherwise quit the crap & shut up on the EOTW stuff.
:::::
And actually many farmers did do what we would call subsistence farming all through the dustbowl - the majority of farms didn't have tractors until after WWII. The thing subsistence practices did for them was keep them one the land & farming through the collapse assuming their debt loads didn't destroy them first.
Those with too much debt didn't make it and ended up like the Joads in 'Grapes of Wrath'... on the move to wherever. And some of them did better abandoning the farm and walking away (especially if they landed a union job at GM or Ford or Boeing during the war)... many faired a lot worse.
If they managed to hang on it is likely that hardscrabble farm eventually became worth millions of dollars by the 1970s - I know many dirt finger millionaires in my rural Midwestern county.
Productive land - bootstrapped through a generation or two without using too much leverage - is still one of the best ways 'little people' can amass sizable fortunes. It is still happening to this day - I know many who have.
Don't get me wrong, I doubled an investment on land I bought in 2002 and sold in 2005. But along with the housing crisis, land values should also be falling, tho I haven't heard a buzz about that specifically.
I was researching the Dustbowl the other day - at least in South Dakota territory - and the homesteads like my grandfather got - 160 acres - were almost unworkable all the way around. The article I read said most of the homesteaders eventually left, many for California, and the federal govt. got their land back. No water, lack of lumber, and then when the soil up and left, that was it. It's better for grazing animals or national parks.
Productive land in a fertile area with water and with a decent growing season... then I could see it working. Nothing much more satisfying than growing your own food and not depending on others.
About gold... that's a gamble. It's fun to own but I don't think it's going to get you that far. I think you're right that with the right land, self-sustenance is the ideal, then all you have to do is guard your veggies and family.
In the end, you just try to do what's right and sleep with a clear conscience and don't worry about the rest.
First!
It's too bad Greenspan wasn't as plain-spoken when he was Chairman.
Mr Greenspan said [...] that he would not be surprised if the fall was in double digits.
Since that's ALREADY THE CASE in many urban areas throughout the nation, how is this an "alert on US house prices", as the article headline would have us believe ?
Perhaps they should have entitled it "Greenspan reads newspaper, reacts".
Wikipedia:
"Froth is foam consisting of bubbles in a liquid."
So, many bubbles on top of a lot of liquidity.
His CYA is killing me. If froth was a euphemism for bubble, how could he have said "I see froth, but no national bubble." Was he trying to be sly and make the regional bubble argument? Here are some definitions for him :
1 a : bubbles formed in or on a liquid : FOAM b : a foamy slaver sometimes accompanying disease or exhaustion
I suppose the mortgage market was superliquid, yes. And yes, it does now look to have been diseased and near exhaustion.
So is he saying he didnt get it that the same factors creating the "froth" in the regional bubbles had infected all areas of lending?
Please, someone, anyone, just make him go away... can he be bribed to shut up? What, the advance on the book wasnt enough??? UGH!
"Of course it will, I engineered it that way. . . dropped the rates to the floor, ignored the lenders I'm charged to regulate. . . let 'er rip.
Wish I sold all my builder/lender stock short.
Haven't had so much fun since I was in charge of musical chairs at my 10th birthday"
Alan G.
That's humorous. Single-digit declines, maybe low double-digits? Average home prices in my state (California) went up 400% in the last 10 years. Going down by 5-20% is nothing, a mosquito on a bull's back. It would have to be as 'big' as this just to be (barely) noticeable on the 50-year price chart. Greenspan guessing whether this decline will be 35-45% or 45-55% would be more newsworthy. Thanks for the info, though, CR
Does anyone have a pie to throw in his face?
Greenspan needs to think about entering a monastic order with strict vows of silence.
His advice to people to go out and get variable-rate mortgages struck me at the time as amazingly irresponsible, and appears even more so in retrospect.
When do we get Al Greenspan's Complete Guide to Fed Jargon ?
Let me know when Greenspan uses the word "haircut".
Greenspan will be responsible for about a two percent drop in the dollar this week- any disagree?
Geez, first he can't see 'em, now they are everywhere.
I can hardly wait for the rest of America to see them. Double digit drops are going to be common in the frothy parts of America? Well, tell me something new.
The other article about long term inflation should be sending shivers down the spine of whomever gets elected president in thirteen months.
I would be StagflationAllen, but for Mark;-}
Someday this war's gonna end....
Reepicheep,
Perhaps they should have entitled it "Greenspan reads newspaper, reacts".
Well said!!!
We are caught in the web that Greenspan spun.
crispy&cole,
Does anyone have a pie to throw in his face?
Maybe I can scrounge up a pie chart, lol.
Greenspan will be responsible for about a two percent drop in the dollar this week- any disagree?
I think if the Fed cuts rates there's a real danger of capital flight and a dollar crash.
I would be StagflationAllen, but for Mark;-}
Well, there's just not much evidence of inflation in the sense of the money supply expanding.
I'm bearish on the dollar because I think unrestrained speculation and expansion of credit (not money supply) is destroying our economy's capacity to create wealth in the future.
It will be interesting to see if Ben agrees and has the guts and political clout to act on those views.
Ben will cut for our short term President. Remember Bush appointed him.
AllenM,
There's always room for more stagflationists.
However, have you considered StagDefAllen?
Or does that sound too much like some sort of German WWII top secret anti-tank weapon? I'm telling you though, we could use an anti-tank weapon these days because I'm not all that confident the helicopters are going to do the job.
We take a guy with a 3rd grade education who breaks the law and we put them away with the "no excuse for not knowing the law" charge.
We let a guy with a PHD, who got paid to study further in the field, create the problem, ignore the problem, basically negligent, make huge profits from book sales. Is Alan G any different than OJ?
In China he might be executed.
ac,
Perhaps the money supply doesn't need to expand anymore. Maybe its historic rise is all it will take.
Compare to the 1970s.
Money, Money, Money
Is Greenspan reading the last rights for the U.S. economy, or is this the eulogy?
Nice of him to get around to telling us that the tax cuts were reckless.
How bout a split screen of Greenspan, the left side showing the video of when he called the bottom on housing...what back in late 2006 I think,
and the right side showing this interview where he states the obvious, that housing is still falling.
Think any network news will do that?
If they are going to put so much into what he says, don't we deserve the right to hold him accountable on his past statements.....in least in the interest of full disclosure!!?
Any news agency that DOESN'T mention his prior call is a no more than a parrot.
Is that what they call capitulation?
I remember that call of a bottom well.
I remember telling my dad, "he's either a liar, or a total idiot."
I still don't know which.
[Please excuse re-posting from less-relevant old thread:]
Apparently I have not been nearly cynical enough about central bank independence.
In an FT interview with Greenspan (FT.com / Comment / Analysis - A global outlook
"Critics say the Fed should have tried harder, raising rates sooner and faster. Mr Greenspan counters that that would not have been acceptable to the political establishment given the very low rate of inflation. He says the presumption that we were fully independent and have full discretion was false. "
Urgh. I was reasonably sure the Fed and BoE would cave eventually, but I figured they would maintain the fiction of independence until there had been a few months of recession and the politicians forced them to lower rates in the face of above-target inflation, and I figured they would hold out for a face-saving month or two after the public pressure was obvious.
Apparently they have already caved, and in fact have never had any meaningful independence.
How did that happen?
Maybe it's time to increase the percentage of gold in my portfolio from recklessly enormous to stupendously insane.
Compare to the 1970s.
In the 70s wages were rising rapidly in terms of dollars. That doesn't appear to be happening now.
Contrast this with China which I do think has a serious problem with inflation (including the "wage price spiral") and to me looks a lot more like the US in the 70s than the US in 2007 does.
That fact that Japan still has deflation also suggests to me that inflation in other countries doesn't necessarily get exported to other countries.
Oct 9, 2006
Greenspan: "Housing market worst may be over."
Greenspan: Housing market worst may be over - Real estate- msnbc.com
Also, notice how China stands as a stark counterexample to the belief that inflation is necessarily bad for stocks. Likewise for Zimbabwe.
ac,
I think our wage spiral is and has been headed off to China.
I would also argue that if China had ALL our manufacturing and service jobs that things would no longer be cheap for us. We keep sending them paper, and they keep sending us goods.
How long it can keep going on I have no idea (even if I am right to think this way).
Maybe it's time to increase the percentage of gold in my portfolio from recklessly enormous to stupendously insane.
That is funny on so many levels. Being a risk straddler, I cannot endorse your opinion but then again I cannot heckle it either, lol.
It also explains why I like this site so much. The powers that be (CR & Tanta) seem to foster a certain level of UberNerdiness and good old fashioned humor.
Alan seems likely to putting the last nails in the coffin of his reputation. Has there ever been an exit of a central banker with less finesse and dignity?
"Greenspan Reads Newspaper, Reacts"...LOL. Yes, your right Reepicheep, that is the correct headline.
I would also argue that if China had ALL our manufacturing and service jobs that things would no longer be cheap for us. We keep sending them paper, and they keep sending us goods.
I don't disagree with this - that's why I'm bearish on the dollar. I guess it's a techinical distinction on whether you call this inflation or not, but I don't.
The flip side is that I don't think the Chinese consumer has the political clout or wealth equality with production to take the place of the US consumer in the Chinese economy.
If the US has a serious recession, China could suddenly find itself in oversupply hell - including all the mass unemployment and falling prices that might go with.
Our whole global economy is misconfigured. It's hard to tell exactly how it's all going to work out. A lot of that depends on decisions that have yet to be made.
Tuesday's rate hike being one of them.
Greenspan:
'froth was a euphemism for a bubble and all the froth bubbles add up to an aggregate bubble.Now its clear;he realy did tell us there was a housing bubble and we were to stupid to see it.
OT,
while waiting for the 60 minutes about to start, check out this from Bloomberg (perfect timing with 60 min I would say).
Listen to the end to hear Mr Laffer say: "Wow". It's negligible, but it's there.
(the clip starts with a phone equipment ad)
Bloomberg News Video
He reminds me of Charlie Brown's teacher.
Sound like Greenspan, in his twilight years, is trying to come clean ( make up for his BS advice of buy using ARMs ) and be remembered as a good guy.
Well see....
However, no matter how you slice it the economic pain for many people that bought homes over past few yrs is going to get severe.
No more MEW, cut backs on consumer spending, it's going to get ugly for US economy and recession is coming.
Bullshit economics and bubbles, tax cuts for the rich, spending like a drunken sailor, and going to war is all attributed to Bushco.
That's what ALL Dems should be saying because they will be cleaning up this asshats mess for at least a decade.
Here is another Greenspan related FT article:
Autobiography's real hero is capitalism
FT.com / Comment / Analysis - Autobiography’s real hero is capitalism
ac,
Agreed!
If we falter, I too picture China in oversupply hell before this is over (not that it is ever truly over).
Let me be one of many to offer Greenspan a warm cup of STFU.
YouTube -
I didn't pay close attention back then (I was a teenager) but I don't remember Volker hogging the limelight after he stepped down as Fed Chairman quite so much.
GS says: "he would not be surprised if the fall was in double digits.
Luckily he didn't say triple digits...'cause then there would have been a problem.
Phew. We're lucky, eh?
High crimes and misdemeanors. Is it either when funneling the world's economies into hades? Guess not.
Like the UK doesn't have enough to worry about with bank panics.
UK housing market set for a painful correction, Greenspan warns.
Alan Greenspan warns of UK house prices drop - Telegraph
"Is that what they call capitulation?"
No.
When you hear companies tapping out, when you see stockholders acting like raging bulls, when you see frightened fund managers who lost everything they own and the reputations to boot taking flying lessons without any interest in the chapters on landing, and when you hear J6P saying, "Never again will I touch RE", then...that's capitulation.
Until that time, this is merely the prelude.
Neil...how about popcorn for all? It's gonna be a long symphony.
US BANKS TOLD TO PLAY STRAIGHT WITH BOOKS
"One of the world's most senior accountants has warned Wall Street's major investment banks to stick to the rules when they report their third quarter results this week."
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/16/cnbanks116.xml
stockholders acting like raging bulls
Perhaps not the best choice of terms?
stockholders acting like raging bulls
Perhaps not the best choice of terms?
I dunno... stock prices were exploding at the beginning of the Great Depression - that kind of separation from realitiy is a clear sign that the financial system is disintegrating.
the GS interview just is pathetic on so many levels; I mean, ouldnt his younger supposedly more media savvy wife talk him out of it? a very bad day for us.
Don't forget, this guy works for PIMCO.
I'm not sure if it's janitor...oh, yes, advisor.
He could help the world by talking frankly about what deflation will do, and the damage to expect, and especially, the length of time it can/may/might take for the froth to drop to a skim on the greedy risk takers lattes.
The party's over for American consumers...
Paul Kasriel, chief economist at Northern Trust in Chicago, has been one of the lonely voices of despair over Americans' personal finances. For example, Kasriel wrote in 2004 that inflated housing prices created only an "illusion" of national wealth. "In recent years," he said, "growth in our capital stock has slowed and the composition of the slower growth has moved in favor of McMansions and SUVs, which do little to increase the productive capacity of our economy."
The following year, Kasriel wrote another essay titled, "Households Still Running on Empty!" In it, he challenged popular arguments that personal income has been underestimated because of the way contributions to private pension funds are counted. His bottom line was that household borrowing in recent years had risen relative to household spending, and that household spending represented a record 76 percent of gross domestic product.
Today's "partying," he said, would lead to tomorrow's "hangover." So here we are: The partygoers have downed a bottle and still they can avoid a hangover.
Froma Harrop
Opinion | The party's over for American consumers | Seattle Times Newspaper
"Tuesday's rate hike being one of them."
ac, you are quite the optimistic one, aren't you?
Well.. I watched (thank god for DVRs) his interview with 60 Minutes. Not much for any UberNerds but for romantics ( and yup I can occasionally rise to that ) his wooing of Andrea Mitchell is really rather sweet.
OK. that's enough sweet interludes. Let the stoning resume.
-K
Not-so-wise sayings
Stephen King is managing director of economics at HSBC
Stephen King: When reassuring words aren't enough -
Business Comment, Business - The Independent
There is nothing more pathetic than a beauraucrat trying to sell his biography. And why do they always go on 60 minutes?
Unless you were in Greenspans position, I don't think any of us really know what the objective is inside the fed based on political pressure. Now that he is no longer the Fed Chairman I am sure his vocal opionions have changed based on his freedom. I understand most people do not like Greenspan but I do think some of what he is talking about today is important to note.
Of course, some professions thrive in tough economic times. Business should be brisk for bankruptcy lawyers. And we will need auctioneers to help unload foreclosed properties.
This should really help keep the economy out of recession. The "bankruptcy boom" might well lead to another surge in asset prices, especially stocks.
The "bankruptcy boom" might well lead to another surge in asset prices, especially stocks.-ac
although al the bulls will agree with you ac, i don't. btwn 2001-2003 the Fed slashed rates from 6 to 1% and the Nasdaq dropped 50% during same period. of course all the money flows went to RE and todays argument is that there is no other place to go except stocks so keep the good times a rollin'. i expect at least another 10% pullback before that scenario might just play out b/c we have USD index at 79, oil at $79, gold at 714, wheat at $9 and M3 at 14%.
money supply depending on how u look at it might be stable but one needs to add in credit growth which is why i like M3. credit is money these days and this has been leveraged way to the upside. Northern Rock and CW are just the beginning. the string of credit crises beginning with New Century until now will escalate IMO.
His advice to people to go out and get variable-rate mortgages struck me at the time as amazingly irresponsible, and appears even more so in retrospect.
Seriously. He was either woefully stupid or outright evil.
He used to be a Rand-disciple gold-standard guy and he is calling out the republicans for abandoning their roots?
After the obvious comic value, the second best reason I would vote for Ron Paul is that there is a good chance he would arrest Greenspan and give him the public whipping he deserves.
What an absolute douche bag.
Cheers,
prat
it really is amazing he's coming out with all of this now. after all those yrs of Greenspeak, this is what he was really thinking. this will make things very difficult for the Repubs to put pressure on the Fed and esp. BB. calling for inflation as he has, i think it makes it harder for BB to aggressively slash interest rates for if inflation soars as Greeny has warned, BB will be taken out to the woodshed.
NYT: What to Own if the Economy Turns Sour?
MARKET VALUES; What to Own If Economy Turns Sour - NY Times
It's not a great read really, but it does have a choice bit where
"P. Brett Hammond, chief investment strategist at the New York fund manager TIAA-CREF" has a recommendation...
"consider a nontraditional refuge: real estate."
To be a little fair he means REITs, and commercial ones at that, but still from the charts that CR has put up, and the comments about the mid-west it seems like a pretty reckless recommendation.
"[W]e may not have a huge run-up in office demand, but we have not had a huge run-up in supply."
He's no Greenspan, but...
Got to give it to 60 minutes to correctly follow Greenspan with a ever so scary JAWS piece on sharks.
YouTube
- Jaws (1975) TV Spot
London Times - Economic View
I hope I'm wrong but I've a very bad feeling
I hope I’m wrong but I’ve a very bad feeling - Times Online
BTW I apologize, if the previous post was off topic, and this even more so...
StagMark and StagAllen-
I've tried to hedge the $ decline by buying un-hedged foreign bond funds (mostly european and some asian treasuries). It seems like the right first play in a stagflationary scenario. If the dollar falls (due to an economic stall or direct inflation), they'll rise and the foriegn central banks should lower their rates and improve return a bit more.
Does this seem like a reasonable low risk strategy or is there some hole in the logic. I'm pretty sure foreign stocks are not a great buy, if the dollar plummets, and anything in the US (where most of my assets will remain anyway) is likely to decline in value. I'm wary of gold (although I might by some funds in a tax advantaged account).
Please remember your fiduciary responsibilities ;^)
BB will be taken out to the woodshed.
Makes that Economist cover of Greenspan handing a stick of dynamite instead of a baton to BB seem all the more prescient, doesn't it?
YouTube
- Broadcast Yourself.
"Just do one thing for me... Get... greenspan"
"Greeeeeeeenspaaaaaaaaaaaan!"
Cheers,
prat
re Anatole Kaletsky who wrote "I hope Im wrong but Ive a very bad feeling"
He's a total establishment guy - best US example would be Stephen Moore of the WSJ.
A classic example of "running dogs of corporate socialism, capitalism for the poor"
-K
Every homeowner, who lost his house after hearing advice from Greenspan (about ARM), should make his dog assrape Greenspan.
Greenspan's book should be taken away by federal judge (like OJ's book) to pay for his crimes. Motherfuckers like him should not be allowed to go on national TV to push more propaganda.
re: Greenspan interview:
what strikes me is his "need to seek approval" in response to Stahls question about Rands claim he was a social climber. i think his book is just that; he feels guilty about his monetary policy and wants to make up to the American public thru this book.
The London Times article is worth the ... time to read:
"In financial markets, it is usually a mistake to follow any line of argument to its logical conclusion, because unpredictable events or interests usually intervene to turn a crisis or a triumph into some kind of fudge. But every few years, a market somewhere gets the bit between its teeth and goes all the way Wall Street in 1987, the ERM in 1992, Russia in 1998, internet stocks in 2000. When this happens, Darwinian logic of short-term survival takes over and events move much more quickly than anybody expects."
To be a little fair he means REITs, and commercial ones at that, but still from the charts that CR has put up, and the comments about the mid-west it seems like a pretty reckless recommendation.
If I really started getting worried about the dollar I might look into rural land or even housing in a depressed area.
I just think the traditional refuges are all juiced up on easy credit. You gotta find something that nobody wants but that still has intrinsic value.
Tonite's UK news on Northern Wreck:
NR: Financial watchdog launches investigation into which bank might be next
Northern Rock: Relief for savers as Chancellor promises to guarantee bank's deposits | Mail Online
Bank seks takeover as savers push it to brink
Bank seeks takeover as savers push it to brink - Times Online
Bank of England lures bidders for NR
Bank of England lures bidders for Northern Rock - Telegraph
"this will make things very difficult for the Repubs to put pressure on the Fed and esp. BB."
There are already some signs that political scrutiny is rising. Democrats including Barney Frank of Massachusetts, who heads the House Financial Services Committee, called last week for a ``meaningful'' cut in interest rates.
Democratic Representative Carolyn Maloney of New York said the same day it was ``no longer a question for the Fed.''
Greenspan Sees Political Pressure on Fed as Inflation Picks Up - Bloomberg.com
These politicians are all in this together Repubics and Demoncrats a like. Inflation is always politicaly more palatable then depression for both parties.
re: Greenspan interiew
i think he craves attention. former jazz band players marries high profile news reporter, can't stop talking and roiling mkts immediately after stepping down as chairman, calls for 1/3 chance of recession in Feb, calls for Chinese stk mkt selloff, publishes scathing book on current administration, and calls for high inflation and further housing decrease. interesting character.
Nice of him to get around to telling us that the tax cuts were reckless.
I don't think he ever said that did he? If so where? Was that on 60 Minutes (I didn't watch it)? In his book? Where?
I know he said Republicans have lost their way due to the deficits but I have never heard him say anything bad about the tax cuts.
Inform me.
f I really started getting worried about the dollar I might look into rural land or even housing in a depressed area. - ac
You beat me too it. Good land is like gold except you can 'eat off it' with out selling any of it. Nice.
There are already some signs that political scrutiny is rising. Democrats including Barney Frank of Massachusetts, who heads the House Financial Services Committee, called last week for a ``meaningful'' cut in interest rates.
The addicts are begging for another hit.
Rate cuts are the whole reason we're in this mess. Somebody needs to communicate in a "meaningful" way that rate cuts are making the economy worse, not better.
Rate cuts have been destroying the capacity of the US to create wealth for 10 years now.
NR: Financial watchdog launches investigation into which bank might be next
Thats all fine and good, but... which banks are on the receiving end of the deposits being transfered out of NR ? Someone, somewhere must be reaping a windfall from NR's bad luck.
Joe Blo,
If you're concerned about the dollar falling and general deflation in assets (gold,real estate, stocks), why don't you just buy some yen and euros?
Despite of the best efforts of hedge funds, the PPT and the BOJ, the yen is doing really well! Imagine what it would do in a free market.
Recession indicator!
From this weeks Barrons
ISI group says jet fuel consumption
is down YOY. This is coincident but
somewhat leading indicator.
Every homeowner, who lost his house after hearing advice from Greenspan (about ARM), should make his dog assrape Greenspan.
Greenspan's book should be taken away by federal judge (like OJ's book) to pay for his crimes. Motherfuckers like him should not be allowed to go on national TV to push more propaganda.
Funny I have been seeing so many recession indicators turning on for last three years that I am completely lost.
Inverted yield curve, housing, consumer sentiment, car sales, truck load,......
Is this time real?
Lost in translation,
Don't buy a bullet-proof vest yet!
But don't go betting the farm on RE and Stocks either.
ISI group says jet fuel consumption
is down YOY.
Is that in total gallons? Or dollar volume?
Remember that new jets are something like 30% more fuel efficient per passenger mile... so it would probably be a good thing to look at that stat carefully.
Maybe they are talking about ink jet
I have never, ever, seen dialogue this sordid on the Yahoo! message boards.
Greenspan said in the interview he was in favor of a tax cut, just not Bush's tax cut. he said the cuts have lasted too long.
i agree that rate cuts will be throwing gas on the fire. CB's never learn. there are so many recession indicators flashing red or rolling over its hard to list them all. i think the burden of proof lies on the bulls to believe the stock mkt can keep pushing up thru all these dangers based solely on the irrational speculative liquidity argument. remember the Nasdaq continued to drop 50% btwn 2001-03 despite rate cuts from 6 to 1%.
Actually, my recollection is that jet fuel consumption was down in 2006 from 2005 slightly, just as was overall gas. But through June, it was up YoY Ytd in 2007 by .9. Maybe that changed this summer. Volume, not price.
For the fuelish uebernerds:
airlines.org
BTS stats
guess you are right. that jet fuel is
not a good indication. Lets just stick to what really matters. Housing ATM is out of cash.
I will try to be wary of Superflous intellectual exercises.
He said the price of risk had fallen to unsustainably low levels beforehand, with investors addicted to asset-backed securities that offered some additional yield over Treasury bonds as if they were cocaine. Mr Greenspan said this demand induced the big increase in the origination of subprime mortgages by mortgage brokers.
This is absurd. Central bankers MANIPULATE the price of risk. As usual, they point to the problem but never mention their own culpability in the outcome.
Abolish the Federal Reserve.
NY Times - Opinion
Sad Alan's Lament
By Paul Krugman
Sad Alan’s Lament - New York Times
dryfly,
Greenspan has, in the past, made allusions to tax cuts possibly, maybe not being such a good idea if used to excess:
Economist's View: What Did Greenspan Say and When Did He Say It?
his mention of "triggers" is interesting.
I can't imagine AG's 60 min interview inspiring confidence in the global or US economies. Might even cause a few jittery investors to sell? AG's diversified across several currencies, are you.
Japan closed for holidays today?
"Abolish the Federal Reserve."
OK and then the treasury dept or some new government sponsored organization would be created to take their place, a government will always use the hidden tax of inflation with printing press money FED or no FED.
Sorry dr strangemoney but them's the facts you know that.
Maybe because they never dis-cussed Alan Greenspan.
remember the Nasdaq continued to drop 50% btwn 2001-03 despite rate cuts from 6 to 1%
Two things to remember:
(1) Cut/increases have a substantial lag... something like 18 months. The effects start taking hold 6 months after a cut but aren't fully felt until 18 months or so.
(2)Markets aren't the real economy. They are mirrors of the economy.
CBs should (and mostly do) focus on jobs, GDP growth & prices. Lets hope BB does - if so he'll find it hard to come up with an excuse to cut.
Three digits == 100%.
So we're going to be somewhere between 0% and 99% decline. Well...that narrows it down.
"Maybe it's time to increase the percentage of gold in my portfolio from recklessly enormous to stupendously insane."
I took mine from "excessive" to "kinda stupid" last month.
As for buying land to live off, that's overrated; it's not so easy, takes a lot of time and energy and a real learning curve. If you're really worried about the end of the world as we know it -- and I'm not -- just be in a good ag area with a lot of truck farmers, especially organic growers who get by without chemical fertilizers and pesticides. Yeah, I'm not worried about the end of the world, but guess where I am?
Has anybody read Greenscam's memoir yet? I have just one question and am wondering whether he mentioned it in his book. The question - does he still have sex?
As for buying land to live off, that's overrated; it's not so easy, takes a lot of time and energy and a real learning curve. If you're really worried about the end of the world as we know it -- and I'm not -- just be in a good ag area with a lot of truck farmers, especially organic growers who get by without chemical fertilizers and pesticides. Yeah, I'm not worried about the end of the world, but guess where I am?
Well for the record - I live in one of those areas and if you plan to be supplied by those truck farmers you still have to have something those folks want if you are going to trade with them... and when everyone is cold & hungry gold doesn't feed you or keep you warm. It too will have marginal utility in a scarcity driven world.
If you want something to trade with them - learn how to fix machinery - shade tree engineering will be in huge demand, always is. They might only be able to trade you chickens for your labor but you can eat chickens.
Secondly if you depended on gold when the EOTW comes - you would have to protect the gold. That requires a learning curve all its own. Now while it is easier to run away with & hide gold it is a lot easier to GUARD land - it isn't going anywhere and if its yours you know it better than anyone.
Dobbs I agree with everything you said - but owning productive land is still one of the best ways to survive economic hardship. Better than owning metal by a country mile in my estimation.
BBC News
Darling censures rating agencies
"The credit rating agencies knew, but it was considered confidential information."
BBC NEWS | Business | Darling censures rating agencies
Has anybody read Greenscam's memoir yet? I have just one question and am wondering whether he mentioned it in his book. The question - does he still have sex?
Troll Brothers | 09.17.07 - 1:04 am | #
Just ask your mom
Troll Bro
Does fucking Americans count?
Joe Blo,
My fear is that if inflation picks up here it could very well infect the world (again) and truly turn into a race to the bottom (again). I therefore wouldn't necessarily count on interest rates falling worldwide (except for a possible short-term recession such as in 1974).
Disco balls!
The Real Story About Treasury Inflation-Protected Securities (TIPS)
Of course, this is not investment advice. It is YOUR job to figure out where we are in Figure 5. There are four choices and although all are possible I lean towards a certain corner long-term and possibly another corner short-term. I'm investing for the long-term though, so that's where I sit.
Am I sufficiently vague? I hope so!
"As for buying land to live off, that's overrated; it's not so easy, takes a lot of time and energy and a real learning curve."
I bought a small farm in Nebraska after I cashed out in CA in 05. I got it for 25% off the asking price and had been on the market for 3 years. I produce what I need for my own consumption but I have the time to do it. I also have had 3 calls this year from people wanting to buy the property from me. It's not for sale. The learning cure isn't that steep if you have good neighbors and a good internet connection.
Democratic presidential candidate Hillary Rodham Clinton is unveiling a sweeping health care reform proposal Monday that would require every American to carry health insurance and offer federal subsidies to help reduce the cost of coverage.
With a price tag of about $110 billion per year
Yahoo! 404 - Page Not Found
Better hope the Japan and China keep buying those treasuries.
Well, tell you guys, it is not going to be gold or silver or even oil that will be most precious in this depression. You know what will be? You cannot figure out by comparing with previous depressions, because that thing did not exist before.
The commodity most valuable this time around will be 'viagra'.
Holding metal is a means to store value until a correction is over. Owning productive land, or tools/equipment, is the means to plod through a period where the value of currency is questioned and barter/exchange rules the day.
Putting 100% in metal is silly, but it should be viewed as a savings account. It will come in handy to barter for large items (ie equipment, land, etc) where the quantity of demand goods (grain, chickens, bullets, etc) is too great to manage for the exchange.
Money is what people accept as a medium of exchange. Fiat currency is what the government labels as "money".
Rothbard's What has the government done to my money is worth a read for both sides of the "buy gold" debate.
" With a price tag of about $110 billion per year "
Would this result in a reduction in total costs the US workers and corps pay to the insurance companies now?
Why even bother going thru insurance companies at all? Just refinance medicare (ie, reconfigure its funding), make it available to all. The end result would be cheaper.
it is a lot easier to GUARD land
BWAHAHAHAHA... yeah, right!
Nothing like being tied to a fixed location that everyone knows you have. You could lose possession simply by leaving.
[BTW, ever hear the joke about engineers? Mechanical Engineers build weapons, Civil Engineers build targets.]
Gold, OTOH, is anonymous, untraceable, easily hidden and covertly transported, not to mention malleable and divisible.
The problem with healthcare isn't funding, it's cost containment. The idea that everyone is entitled to an MRI every time they stub their toe will never be sustainable.
dryfly:
'Denouncing the tax cuts brought in by Mr Bush, Mr Greenspan says the Republicans deserved to lose the congressional elections last November because they abandoned fiscal discipline and hugely swelled the US budget deficit.
He says he was surprised Mr Bush was unwilling to temper his campaign promises with fiscal reality once elected in 2000, as previous Republican administrations had done.'
Greenspan's shock: oil behind Iraq invasion - World - theage.com.au
The whole article is gold!
Hope this helps.
The stock markets will probably increase 1%-2% tomorrow based on the Greenman's commentary. Else, maybe Northern Rock will do the trick.
What the gold debate misses is taxes.
Money has value because the IRS requires it. As do state treasuries. So after bartering you have to convert back to currency anyway, or go to jail.
As long as taxes are paid in currency, the currency will have value.
Gold? It may go up, it may go down. But gold will never be the medium of exchange in markets that pay taxes.
"If you plan to be supplied by those truck farmers you still have to have something those folks want if you are going to trade with them... and when everyone is cold & hungry gold doesn't feed you or keep you warm. It too will have marginal utility in a scarcity driven world."
I honestly don't think it's going to be that bad. We don't have a shortage of resources, just misallocation and underutilization. Oil may get scarce, but energy is plentiful if we put 1/10th the effort we put into Iraq into harnessing it.
As for me pooh-poohing the farming life, it's just because I know I'd be bad at it. Also, we're socialists around here, and there's a lot of good farmland and people who know how to use it. Come a real societal breakdown, they'd commander the corporate ag land -- mostly in strawberries, 'chokes, and brussels sprouts, and probably would fall out of use anyway -- and get a ton of unemployed volunteers to farm it. College kids and surfers -- which we have plenty of -- are good for something, and the Latinos know what to do.
Remember, people didn't starve in the depression because there wasn't enough food. They starved because there was no economic basis for getting the food from the farm to the city.
"Dobbs I agree with everything you said - but owning productive land is still one of the best ways to survive economic hardship. Better than owning metal by a country mile in my estimation."
Sigh. I just can't go there. My wife is chronically ill, unable to stand up to a hard life or to live a decent life without regular medication. I can't plan for that self-sufficient, insular lifestyle in case of societal breakdown, even if I wanted to , because she probably wouldn't survive it. So should the worst happen -- and I still don't think it will -- we're casting our lot with our town full of old hippies, dreamers academics, and selfish yuppies. I was proud of how they all pulled together in the aftermath of the earthquake here many years ago, and I have faith in them still. And frankly, I have no choice but to do so.
As for guarding gold -- well, you don't have to guard it hard if no one knows you have it. And you don't let them know that you do until you're ready to use it in a big way -- to buy an income-producing resource, for example. I'm a socialist, but I've got the peasant mentality down pat, too.
Farmland needs guarding, too, frankly. Pilferage, animals, etc. And if you're far enough out to be away from the hungry crowds, you're also very, very alone. And there is danger in that.
So in a societal breakdown -- again, I don't expect it -- I'd stay a socialist inside the walls of my small city. With a peasant's gold stash for life's little emergencies or opportunities.
Good points Dobbs.
No way could I survive the back-to-farming life. I am pushing 70 and although I'm in good physical condition for my age, a hard physical life like that would be the end of me.
What a clown. Coincident with the FT article is this one in the NYT:
Real estate agents and market watchers throughout the region report that houses are selling at prices 5 to 18 percent lower than a year ago.
That's the Big Apple, folks. At least you'd expect that to be within AG's view, even if he's blind to the carnage in Florida, Arizona, etc.
AG and David Lereah should form a comedy duo.
I get a feeling that the people who claim that when times get really bad, no one will want gold, have not held a 1 oz gold coin in the hand recently(ever?), and maybe are just plain cowards, afraid to store their wealth in something(honest money) so neglected by our modern society, and seen as an "ancient relic."
Saying that, I believe that knowledge, skills, tools(broadly speaking), and location may be the right things to worry about at this time.
Greenspan takes the typical Zionist line on Iraq. It wasn't about Israel, oh my no, it was about oil. But what he doesn't explain is why Japan and China that are more dependent on Middle East oil than the US never felt it necessary to try to control the area militarily. Or why an Iraq exhausted from the 1991 war would be any threat to oil from the region. The war in Iraq was done to please the Neocons who represented Israel and their warmongering allies in the Pentagon. It was not because of oil. And this is also the view of Mearsheimer and Walt who take a very objective view of the matter. Unlike AG.
Democratic presidential candidate Hillary Rodham Clinton is unveiling a sweeping health care reform proposal Monday that would require every American to carry health insurance and offer federal subsidies to help reduce the cost of coverage.
With a price tag of about $110 billion per year
Would you prefer to spend it on a pointless war in Iraq, Kevin?
Dryfly says
"I know he said Republicans have lost their way due to the deficits but I have never heard him say anything bad about the tax cuts."
He claimed that his support for tax cuts was linked to triggers that would revoke them if certain economic conditions came to pass, but that Congress forgot the triggers. For that he was called naive by others.
By Brian Knowlton
Published: September 16, 2007
WASHINGTON: Two days after predicting that U.S. forces in Iraq might be reduced to 100,000 by the end of next year, Defense Secretary Robert Gates said Sunday that American troops were likely to remain in that country for a "protracted period." He also said he would recommend a presidential veto if Congress approved a Democratic effort to limit the time troops could spend in Iraq.
Meanwhile Hillary proposes a billion dollar health insurance program.
The US is heading for a guns v. butter problem during the next ten years. Does it want to be a world controlling empire, for the benefit of a coterie of imperialists, or a place that is decent and good to its citizens?
OT:
Microsoft fine upheld by European court. This is welcome news to all those who hate MS for what it has done to personal computing. I rejoice.
BBC NEWS | Business | Microsoft loses anti-trust appeal
But what he doesn't explain is why Japan and China that are more dependent on Middle East oil than the US never felt it necessary to try to control the area militarily
Does that question even need asking? Because first the British, and then the US, firmly had the region under their sphere of influence and miltary control.
Note that the Japanese did conquer (temporarily) Malaysia and the Dutch East Indies (Indonesia), largely for oil. That's WWII, in case you forgot.
And lastly, China was in no shape to exercise military force overseas during the 20th century, and still isn't. Actually they never did even when they had the means, they just weren't interested.
"If the US has a serious recession, China could suddenly find itself in oversupply hell - including all the mass unemployment and falling prices that might go with."
AC- The demand for Chinese consumer goods that are exported to the US could easily be filled by China's 1.3 Bln people. The Chinese gov. will have to act to prevent a deflationary cycle if US demand for Chinese goods suddenly dries up. This action could be extremely loose monetary policy coupled with temporary deficit spending on infrastructure and other public investments to ensure there is domestic demand for Chinese produced products.
I believe a dollar collapse would benefit the standard of living for the average Chinese (Lee Six Pack?) given an appropriate Chinese gov. response that enables the surplus of consumer goods to be consumed domestically.
Societal breakdown? You people are scaring me.
Would you prefer to spend it on a pointless war in Iraq, Kevin?
Yes.
Societal breakdown? You people are scaring me.
Don't let the nutters scare you. They are on every site that posts even one less-than-bullish financial article.
That said, a working knowledge of firearms and a good social network of family and friends are rewarding things in their own right and are useful if the unthinkable occurs. Which it won't.
As an aside, apologies for my earlier ungentlemanly vulgarity. Greenspan really, really pisses me off.
Cheers,
prat
Prat:
So you would prefer to spend billions on the Iraq war than on proper medical care for all Americans? Then, tell me what benefit the Iraq war has brought to America so far? I mean aside from the benefit of almost 4000 dead soldiers and many thousands crippled for life, not to mention the billions, maybe a trillion, in debt?
yogurt:
Nixon understood the situation in the Middle East. Those nations have nothing to sell but oil, so they will sell it. We don't need to occupy them militarily to get it. Why would they not sell it? The idea that we must control them militarily to get the oil is nonsense.
Anyone else see AG on the Today show this morning? Fast forward to the 6:10 mark on this video -- my nomination for video clip 'o the day....
Greenspan discusses his new book - MSNBC Video
Gold, OTOH, is anonymous, untraceable, easily hidden and covertly transported, not to mention malleable and divisible.
IE stealable.
The land is still there - it ain't going no where. Plus you eat from the land. Hard to beat that - appreciates in value and it feeds you.
I personally don't know anyone who got rich owning gold - I know plenty of people who got rich then BOUGHT gold. You know how they got rich? Many of them through owning land first. And they still own the land - or a lot of it.
Think that one over before you laugh too hard.
Dryfly, I love your posts. But farming for sustenance? Even farmers can't reliably do that. Re my post about my grandfather in the Dustbowl, no one knew farming better than him. Moved to N.J. and the boulders got him. Still barely sustenance. Here in NH we have such short growing seasons, you not only have to have an ideal season, you have to know how to store for the next 11 months. I'd love to go off the grid, but have found by experience it's more practical to read about it than do it. Fun to try, but unless you're really a granola, good luck.
Dryfly, I love your posts. But farming for sustenance? Even farmers can't reliably do that. Re my post about my grandfather in the Dustbowl, no one knew farming better than him.
Outsider - the thing about good income property land is it can do BOTH. It can produce decent income and appreciate in value while times are good and should the world go to hell it becomes a refuge like no other.
The only exception is of course a major war - if you held land in Poland in 1938 you were SOL. But gold didn't help you much either unless you got out well before 1938... before the Blitz.
Seriously I do NOT expect the end of the world but if I did I certainly would not want to be in a suburb or urban setting... with or without gold. You'd need a personal army to protect yourself & your stash - one well armed individual with a small fortune in easily stolen loot in that environment wouldn't cut it.
That has been my point all along. If people really think the wheels are falling off then they should act like it & prepare wisely - own land they can work & defend - otherwise quit the crap & shut up on the EOTW stuff.
:::::
And actually many farmers did do what we would call subsistence farming all through the dustbowl - the majority of farms didn't have tractors until after WWII. The thing subsistence practices did for them was keep them one the land & farming through the collapse assuming their debt loads didn't destroy them first.
Those with too much debt didn't make it and ended up like the Joads in 'Grapes of Wrath'... on the move to wherever. And some of them did better abandoning the farm and walking away (especially if they landed a union job at GM or Ford or Boeing during the war)... many faired a lot worse.
If they managed to hang on it is likely that hardscrabble farm eventually became worth millions of dollars by the 1970s - I know many dirt finger millionaires in my rural Midwestern county.
Productive land - bootstrapped through a generation or two without using too much leverage - is still one of the best ways 'little people' can amass sizable fortunes. It is still happening to this day - I know many who have.
Don't get me wrong, I doubled an investment on land I bought in 2002 and sold in 2005. But along with the housing crisis, land values should also be falling, tho I haven't heard a buzz about that specifically.
I was researching the Dustbowl the other day - at least in South Dakota territory - and the homesteads like my grandfather got - 160 acres - were almost unworkable all the way around. The article I read said most of the homesteaders eventually left, many for California, and the federal govt. got their land back. No water, lack of lumber, and then when the soil up and left, that was it. It's better for grazing animals or national parks.
Productive land in a fertile area with water and with a decent growing season... then I could see it working. Nothing much more satisfying than growing your own food and not depending on others.
About gold... that's a gamble. It's fun to own but I don't think it's going to get you that far. I think you're right that with the right land, self-sustenance is the ideal, then all you have to do is guard your veggies and family.
In the end, you just try to do what's right and sleep with a clear conscience and don't worry about the rest.