proof of greenspan's complicity in creating the biggest bubble in history... also proof that alan is intellectually dishonest and will change his view when convenient.
Proof? Of that? No. What I see looks more like intellectual dishonesty on the part of the writer - that good ol' oxymoron "journalistic integrity."
The quotes he pulls from the Sept '96 FOMC transcript are taken way out of context. AG's quote, as used, seems to imply that he agreed there was actually a financial bubble in the US markets in Sept '96. Well, that's not what he said. If you read the actual transcript, you will find that he was commenting on potential danger and potential actions in dealing with a bubble, should there be a bubble. His comment was in reference to Lindsey's expressed concerns that conditions were developing that could lead to a financial bubble, particularly excessive optimism about corporate profits. Lindsey also commented on the psychology of it, likening it to a "gambler's curse" where a string of good luck makes the gambler even more optimistic about his luck continuing (see page 24, last paragraph), and worried that "our luck may be about to run out."
What Roach conveniently leaves out of his "proof" is that, besides the dull reporting of economic statistics from the various FR banks and governors, the meeting is full of hypothetical discussions of scenarios that might develop from the trends that certain pieces of data might imply and the various possible ways that the Fed might best deal with those situations should they come to fruition.
BTW, in the Spring of '96, there was a mini-bubble of sorts in the early internet stocks, but by the time of that meeting, it was pretty much deflated and it wasn't until late the following Summer, or perhaps the Fall, that a few inets were let out of the dog house. It wasn't until late '98 that it became clear to many people there really was a bubble, but they were few and were shouted down by the addicted gamblers who were insisting that it's better to let your money ride. "Look at the streak I'm on - why would I want to stop now? In fact, you should put some money down, too, 'cause those wining hands just keep on coming." I seem to recall arguing with them right here. Weren't you one of 'em?
Bob
PS: AG's a funny guy. Hell, he even opened the meeting with a setup for a punch line from the SF Fed Gov. You could almost hear the "ba-da-boom" when he landed it. |
