>>Why didn't Greenspan raise margin requirements when he was worried about exuberance?<<
Uncle Al stated on the record that raising margin requirements would have no impact on the mindless zombies because there are (were?) so many other ways that zombies could borrow to buy stock. Think about it, if you are a mindless zombie and you are convinced you are a financial genius because you have a hole in your head where the thinking part should be and you just know that AMZN is going to $400, what do you do when your brokerage tells you that Uncle Al has just raised your margin requirement? Here's what you do: (1) you curse Uncle Al for being an anachronism that just doesn't get the new economy; (2) you call your credit card company for a credit increase, or (3) you get a home equity credit line. Why? Because you can't lose.
>>And how can he have supported the GW tax cuts by saying he was afraid the surplus was going to get too BIG?<<
Because, like anyone with a brain who has been around a few decades, he knows that if you give a big bag of other people's cash to politicians, any politicians, they are going to spend it. They are not going to say, "hey, here's some extra cash, let's give it back to the people we stole it from." (they should say, "from whom we stole it," but what do you expect, they're politicians, lawyers too, most of them). Hence, pre-empt the whole situation a priori by making sure the pols never get their grubby mitts on it. Get it? |
