Greenspan vs. Bernanke: The Follies of Fed Chairmen
Poor ol’ Alan…
We almost felt sorry for him…
“Maestro mauled…” said the headline in The Financial Times. We wanted to maul him many times. But now that others were doing it…it made us feel sympathetic to the old scalawag.
Didn’t the Alan Greenspan Fed’s failure to curb subprime lending deserve to go into the ‘oops’ category, demanded chief tormentor Phil Angelides.
Mr. Greenspan defended his legacy. He was right 70% of the time, he said. The other 30% of the time he was wrong.
Hey, that’s not bad. Pity it’s not true. Greenspan was wrong 90% of the time – at least.
He thought those fancy derivatives actually spread the risk of failure…and made the system more stable.
He thought those subprime loans helped people of modest incomes realize the goal of home ownership.
He saw no risk in keeping the key rate at an ‘emergency’ low level…years after the emergency had passed.
But he hit one of those magic moments last week…when he was finally right about something. He declared that the yield on the 10-year note was “the canary in the coal mine.” This week, the canary wobbled…but stayed on his feet. He’s still standing…but looking a little peaked.
While the former Fed chief was in the spotlight at The Financial Times yesterday, the present Fed chief was front-page news over at The Washington Post. Alan Greenspan is a scoundrel, no doubt about that. But he was, in some ways, a better Fed chief than Bernanke.
The trouble with Bernanke is that he doesn’t know his limitations. He actually believes the Fed can look at the possible outcomes going forward and improve them before they come out.
“Fed chief sounds a deficit warning,” is the headline. He said Americans faced a “difficult choice.” It’s between higher taxes and fewer entitlement services, he said.
This doesn’t seem like a difficult choice to us. We’d gladly accept fewer “services” from the feds if they’d lay off on the taxes. But that’s because we’re in the half of the US households that actually pays taxes.
No kidding; the report was in yesterday’s news:
“Almost one half of US households pay no federal income tax.”
So, welcome to the beginning of the end. If half the citizens get bread and circuses without paying for them, you can bet that the whole shebang is headed for destruction. The math doesn’t work. Half the people have no interest in curbing taxes or spending. Obviously, those people would prefer to raise taxes – on us – rather than give up their free pills and retirement benefits. Even among the half that does pay taxes, most pay very little – less than they get back in ‘services.’
Meanwhile, the ‘rich’ get socked hard. According to the reports we’re seeing on scurrilous blogs and from our usually unreliable sources, the tax burden on the rich is set to rise over 60% of income – thanks to the health care charges they will have to bear.
By the way…the whole thing is a fraud. The services, that is…
Here’s how it works. In 2007, the private sector finally blew itself up – thanks largely to all that debt offered by Wall Street and encouraged by the Alan Greenspan/Ben Bernanke Fed.
So then…in comes the Fed again…and the US government…wearing white hats and pretending to save the situation. How? By bringing more of the economy under their control!
As far as we can tell, the last successful government program was WWII. And that was only successful because the competitors’ programs were also run by government. But that doesn’t stop them…