<<folks discover that they cannot spend themselves into prosperity and lower their obligations by more borrowing>>
They will sue Greenspan, Jay. Read on, please.
Joe Sixpack's $100,000
Published: January 16 2004 18:42 | Last Updated: January 16 2004 18:42
A grey-haired man in an expensive suit rises. "Your honour, my name is Perrier Mason and I am acting for the plaintiff. My client Joe Sixpack is suing Mr Alan Greenspan, former chairman of the Federal Reserve, in order to reclaim the $100,000 he owes his creditors and, of course, the obligatory $20m in penal damages for the psychological stress, emotional trauma and all the rest of it.
We will show that the defendant encouraged, nay incited, my client to take on debt to keep the economy expanding. Surely it should be the defendant's job to pay it back. I call as my first witness Joe Sixpack."
An overweight man shuffles into the witness box.
"Mr Sixpack. You owe $99,568 to various credit card companies and car leasing groups. Why did you take on all this debt?"
"I believed it was my patriotic duty to borrow. They said the economy was in trouble. They said we should not give in to terrorism and should keep spending. Who was I to argue? Besides, the government was borrowing hand over fist. What was good enough for Uncle Sam was good enough for me."
"But surely you expected to pay the money back?"
"I did at first. But then the government kept bailing people out. It bailed out the Mexicans. Working through the International Monetary Fund, it bailed out the Argentines and Brazilians. It organised a rescue package for the hedge fund, Long-Term Capital Management. Clearly the more you owed, the more likely you were to be rescued. Finally, the government even said that the Iraqis shouldn't have to repay all their debts. If a member of the axis of evil isn't paying the money back, why the hell should I?"
"Thank you, Mr Sixpack. No further questions."
An elegant lady in a designer outfit now stands. "Your honour, my name is Miranda Rights and I appear for the defendant. Mr Sixpack, what is your weight?"
"250 pounds."
"Did you recently take part in a class action suit on behalf of gravitationally challenged people against Big Burger Foods, arguing that they enticed you into eating their product and putting on weight?"
"I did."
"And do you drink?"
"A sixpack every day."
"Did you also take part in a class action suit against All Gas and Gators, the Florida brewery, arguing that its product caused you cirrhosis of the liver?"
"I did."
"Do you, Mr Sixpack, take responsibility for any of your actions at all?"
"Of course not. I'm a fictional character. In fact, if I lose this case, I'm suing the author. And you."
"A fair point. No further questions."
Mr Mason rises again. "I call as my second and final witness, Mr Alan Greenspan."
A small, bespectacled figure makes his way to the witness box.
"Are you Alan Greenspan, formerly chairman of the Federal Reserve and currently resident at the Home for Retired Central Bankers, Dunpumpin', Miami Beach, Florida?"
"On the one hand, I am. On the other, physical evidence can always be falsified and it would be wise to collect more data before taking action. To be sure, many people have attested as to my identity but . . . "
The judge intervenes. "I think, to save time, Mr Mason, you can treat that answer as a Yes."
"I am much obliged, your honour. Mr Greenspan, in December 2002, you said that 'oft-cited concerns about the levels of debt and debt-servicing costs of households and firms appear a little stretched. To be sure, the mortgage debt of homeowners relative to their income is high by historical norms. But, as a consequence of low interest rates, the servicing requirement for that debt relative to homeowners' income is roughly in line with the historical average.
"'Moreover, owing to continued large gains in residential real estate values, equity in homes has continued to rise despite very large debt-financed extractions.' You went on to conclude that debt servicing costs were 'not a significant cause for concern'. I put it to you, Mr Greenspan, that any reasonable man, like Mr Sixpack, would have assumed that taking on debt was a wise thing to do."
"To be sure, a general increase in debt levels was warranted. But that did not mean that any specific individual should incur . . . "
"I'm sorry, Mr Greenspan, we have no space in this article for any reasoned response you might make. In early 2004, you also defended your decision to cut interest rates heavily after the equity bubble had burst, rather than trying to attack it with higher rates during its expansion. You added that the US economy's shallow recession in 2001 suggested that 'there appears to be enough evidence, at least tentatively, to conclude that our strategy of addressing the bubble's consequences rather than the bubble itself has been successful'."
The lawyer turns to face the jury. "When the dotcom bubble burst, America needed heroes. It needed people to keep borrowing so the economy could keep growing. Joe Sixpack stepped up to the plate. Now he's being told he has to pay the money back, that actions have consequences. That doesn't sound very American to me. Joe Sixpack is a hero. Isn't that worth $100,000 of Mr Greenspan's money?"
The veteran central banker clears his throat. "I may have made speeches to that effect. But are you saying that your client ever listened? Look at him. He's sitting in court reading the swimsuit edition of Sports Illustrated. I should sue him for wasting my time."
"Now you're talking," says Mr Mason. "May I offer my services?"
The case continues until all the lawyers are rich.
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