Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : I AM A MINDLESS ZOMBIE -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (139)	9/3/2002 9:21:35 AM
From: TobagoJack	Respond to of 258

Hello Maurice, I am baaack! I had learnt much during my trip and have enough material to add vivid colour and brilliant surround sound to your worst nightmares. More during the weekend. Here is something funny from www.dailyreckoning.com. DDGU, Jay QUOTE - Speaking of eternal torment, Alan Greenspan delivered another of his torturously mind-numbing speeches last Friday at a Fed-sponsored symposium in Jackson Hole, Wyoming. But in a departure from his usual style, Greenspan's message was clear - very clear - and straight to the point: the bubble wasn't his fault. - Yeah, right. - "Bubblarious," is what Financial Sense.com's Jim Puplava called Greenspan's disingenuous self- exoneration. - "According to the Fed," says Puplava, "asset bubbles can't be prevented. The reason is that raising interest rates to prevent a bubble from taking place would wreck the economy. In the words of Mr. Greenspan, 'No low- risk, low cost, incremental monetary tightening exists that can reliably deflate a bubble.'" - In Greenspan's speech - a textbook example of historical revisionism - the Chairman portrays himself as a concerned, yet impotent observer of the developing stock market bubble - fully aware of its destabilizing presence, but powerless to prevent it without also destroying the economy. The only problem with this revisionist fairy tale is that it is just that, a fairy tale. - The truth is, Greenspan was a credulous acolyte of the New Era fallacy. He embraced the fallacy wholeheartedly and actively nurtured the resulting bubble - both by conducting a very easy monetary policy throughout most of the late 1990s and also by legitimizing the bubble as a "productivity revolution." By legitimizing a farce, Greenspan encouraged folks to throw their money into an absurdly over-valued stock market. - "The struggle to understand developments in the economy and financial markets since the mid-1990s has been particularly challenging for monetary policymakers," Greenspan admits. "We were confronted with forces that none of us had personally experienced. Aside from the then-recent experience of Japan, only history books and musty archives gave us clues to the appropriate stance for policy." - Musty archives? Gosh, what good could possibly come from examining those? Remember, history never repeats itself exactly, it merely rhymes. So what could Alan Greenspan possibly have learned from studying the mistakes of those who preceded him? Musty archives would certainly have been of no use to him while he was presiding over a New Era of productivity miracles. Thus, by ignoring the lessons of history, Greenspan blithely set about the business of bubble-building. - "As events evolved," the Fed Chariman recalls, "we recognized that, despite our suspicions, it was very difficult to definitively identify a bubble until after the fact - that is, when its bursting confirmed its existence." - Well, maybe so, but Nasdaq's peak PE ratio of 243 in early 2000 was not the very first clue that the speculative fever in the stock market had gotten a little out of hand. Just maybe, there were one or two hints per year in 1996 and 1997 and 1998 and 1999 and 2000 that an epic stock market bubble was gestating. - "The notion that a well-timed incremental tightening could have been calibrated to prevent the late 1990s bubble is almost surely an illusion," the Chairman asserts. - What is surely no illusion, however, is that Greenspan's well-timed incremental EASINGS throughout the late 1990s fueled the bubble - the very same bubble that he now claims to have found so troubling while it was inflating. - "Human psychology being what it is, bubbles tend to feed on themselves," Greenspan continues, "and booms in their later stages are often supported by implausible projections of potential demand. Stock prices and equity premiums are then driven to unsustainable levels. Certainly, a bubble cannot persist indefinitely. Eventually, unrealistic expectations of future earnings will be proven wrong. As this happens, asset prices will gravitate back to levels that are in line with a sustainable path for earnings." - Oy...NOW he tells us! UNQUOTE