I probably dislike Bush as much as anyone, and certainly he's caused a lot of problems that led to the decay in our economy, but Greenspan is rather like the pot calling the kettle black.
The reality is over the last 50 or so years our policies have encouraged great wealth building for the few, and screwing the bulk of the other Americans in favor of building the economies of much of the rest of the world.
I'm talking about things like not building modern plants to build practically anything here, while everything from A to Z, is being built in modern plants elsewhere, many with American companies or financing providing the needed incentives for doing so.
Sadly it took Japanese companies to prove American workers can build things every bit as well as they when the Japanese car manufacturers built new modern plants for building cars here. The quality of Toyota's, Honda's, etc remained the highest rated, the costs remained low, yet most of what they build are built right here.
What Greenspan did as head of the FED was either stomp on the accelerator, set the cruise control, and stomp on the brakes. The banks in cooperation with Greenspan spurred building like never before as virtually anyone who could breath and fog a mirror could buy a house. With lenders sometimes lending more than properties appraised for, with teaser loans, and with bankers and mortgage brokers all explaining that don't be concerned about your teaser loan adjusting, when it does we'll have a new vehicle to move you into, the American economy was built on construction and real estate appreciation.
The banks were as responsible as anyone for the failures as they didn't make that new group of teaser loans available when the first one's expired. Instead of foreclosures they could have had satisfied clients, but while 7/1 ARM's previously were priced roughly a point below fixed loans when people originally picked them, when they adjusted they were often no more than an eight point less, if that. Add that to the fact that the FED had learned from Greenspan not to really pay attention to the economy until it hits you over the head, so it did.
Now Bernanke is stuck, he inherited the mess Greenspan left behind, he inherited the debt Bush was running up in spending thousands of times his original estimate on Iraq while failing miserably at getting Bin Laden, the guy who caused 9/11. He inherited a banking system run amok with the lack of limits established by Greenspan, he inherited an SEC that totally ignores its own rules when it comes to things like naked shorting. He inherited CEO's, Hedge Fund Managers, etc who make millions, or billions in spite of frequently bringing companies to the brink of bankruptcies. He inherited tax cuts that made the wealthy far wealthier while the remainder got enough not to complain.
It didn't matter that people like Warren Buffett didn't think the wealthy needed the cuts, but many were happy to take it without saying otherwise. Now I can't say I agree with Clinton or Obama either in raising the capital gains rate, at least not for everyone. Graduating it, however so people earning more than say a million annually pay more, then perhaps another break at $5 million and above makes sense to me. Of course I'm a rebel. If it were up to me, the most people could make would be some sort of multiple of the U.S. Presidents salary. I know it would be tough, but if the President of G.M. only earned say 10, or maybe 25 times what the President of the U.S. I think he could take it, after all the billions he's losing are a drop in the bucket to Bush.
I think the reality is most of our companies are being run by mutual admiration societies. The CEO's etc have their bonuses authorize by Board of Directors who're all getting bonuses from someone on a similar basis. No one in this group wants to do what's right for shareholders, or whats right to keep the cost of the products they're building down, not when they can pay more millions to be spread among themselves.
JMHO
Gary |
