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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (29344)5/4/2005 3:33:37 PM
From: Alias2k5  Read Replies (1) of 116555
 
I share concerns about whether the Fed is on the right course, but don't think it's being driven by little guy / big guy preferences. Greenspan took the funds rate to 1% to be "accommodative" of the completely unexpected 9/11 and Iraq War contingencies - that's when he started using the term - now we're in a process of "measured" withdrawal of that accommodation. "Accommodative" decrypted means patriotic leniency.

If somebody's being bailed out it is the current federal administration and the enormous war and security induced deficit and debt that would have been impacted by more rapid rate increases. I don't think Greenspan, or anybody else, could predict the costs associated with these policies. I certainly agree that Americans have been led to pile up personal debt by leveraging their artificially enhanced real estate gains, but would question if the Fed can save anybody from a bubble - the markets ignored Greenspan in his bully pulpit on "irrational exuberance." I would disagree that the Fed "unwound" the tech bubble - the market started to collapse in April 2000 - Greenspan didn't really act until a year later when much of the damage was done.

I think the Bush administration has been fiscally irresponsible and Greenspan in his final years has reverted to his schoolboy ideology in order to "accommodate" bad government in what he considers a good cause.
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