John,
re: I think that he is neither liberal nor conservative I think he is a dope.
I put quotes around "liberal", for good reason. Liberal and conservative, especially as they relate to Republicans and Democrats, have become meaningless terms. I guess they use the terms "dove" and "hawk" for Fed officials. In that respect, Greenspan is the most doveish of recent fed chairman.
But the major point is that Greenspan can do whatever he wants, print dollars, lower the funds rate, and it's mostly symbolic for most businesses. A separate government agengy, the FDIC, rates each and every bank, and it's loan portfolio. The banks are awash in cash, thanks to the fed, but the FDIC has raised the bar on their ratings based on the banks loan portfolios. Loans for small or medium sized businesses that were approved three years ago are laughed at today. There is a very real credit crunch. In a bad economic environment, the FDIC doesn't want banks going under. This doesn't directly effect the Intel and Microsoft's that have other access to capital, but it effects their customer's spending. It's much less sexy than the secretive Fed and their secretive meetings, but it has more of an impact on GDP. Don't believe me, talk to someone very high up at your bank.
That, and the current administration is spending like a drunken sailor, or a "turd" world country, as Tim would put it. Folks are right that money is flowing out of the US dollar; is it a coincidence that we are going from a budget surplus to a very healthy deficit? Getting back to your "dope" comment: It's not conservative or liberal, it's smart or stupid. It's smart to run a balanced federal budget; it's stupid to lower taxes and increase spending 'till you have to issue $Billions in debt. Did the market anticipate all this when Bush was elected (look at the finacials in Texas, look at what his brother has done in Florida)?
Greenspan isn't the issue, he follows, he doesn't lead. The most obvious villain is not always the real villain.
John
PS It's pretty remarkable that only a year or two ago, Greenspans biggest fear was too big of a budget surplus, that the government would have too much influence with all the dollars they would have to invest. In that case, your "dope" comment is true. |
