Darkhorse,
Well written and concise. Couldn't agree more!!!
Later,
Cracked
Well written and concise. Couldn't agree more!!!
Later,
Cracked
Jim Roger's Article on Greenspan
- Thread starter Reverend Trader
- Start date
i'm OT here, but neither radio nor television were products of QM, simply because, initially, they did not use transistors nor anything else related to QM.
in addition, i seem to remember that transistor was invented before the QM-properties of semiconductors were researched, so it would be quite a stretch to call transistor "the first application of QM". but i may be wrong in that account.
- jaan
Wow! That Greenspan guy is pure evil! Single handedly wiping out the thriving American economy, ostensibly for some purpose, yet I can't quite discern what that is at this time. And in my naiveté here I was thinkng all this time that he was trying to mitigate the damage that the collective consumer had brought upon itself. Stephen King ought to write a book about this guy, I hear evil sells.
I guess I never saw these classes listed in the college course schedule:
Federally Mandated credit card abuse 101,how to buy more than you need and max out your debt.
Paying 500 X book value in the stock market 1999, how to survive on SS and cat food.
World Economies 402, they will never touch you.
Smile and Consume 301, why the world hates Americans.
The "bubble" troubles have done one thing, illuminate the wholesale abdication of personal responsiblitly, that which used to be held as a virtue is no longer even recognized as a tenet. It's so much easier to find a scapegoat. May I humbly suggest reading a bit about the man before you go about "bitching slapping" his integrity.
http://www.jewishpeople.net/alangreenspan.html
More views on the matter.
http://www.bondheads.com/the_Fed.htm
http://www.allstocks.com/agreenspan.html
I guess I never saw these classes listed in the college course schedule:
Federally Mandated credit card abuse 101,how to buy more than you need and max out your debt.
Paying 500 X book value in the stock market 1999, how to survive on SS and cat food.
World Economies 402, they will never touch you.
Smile and Consume 301, why the world hates Americans.
The "bubble" troubles have done one thing, illuminate the wholesale abdication of personal responsiblitly, that which used to be held as a virtue is no longer even recognized as a tenet. It's so much easier to find a scapegoat. May I humbly suggest reading a bit about the man before you go about "bitching slapping" his integrity.
http://www.jewishpeople.net/alangreenspan.html
More views on the matter.
http://www.bondheads.com/the_Fed.htm
http://www.allstocks.com/agreenspan.html
Here are some things you guys need to think about before you try to blame your personal financial losses on Greenspan:
1. Interest rates and money supply growth were neither high nor low during the bubble years, they were historically normal.
2. Major fundamental changes in business were occurring all during the 90's that caused massive optimism and unprecedented productivity growth. The future was bright and everything was possible. Psychologically we were ready to buy any tech stock that seemed to be a good idea. That is mania, and has nothing to do with interest rates or money supply.
3. In hindsight we can see that there was massive fraud occuring all during the late 90's that inflated earnings and revenue numbers for major corporations.
4. Momentum investing completely took over from fundamentally oriented investing. The greater fool theory worked well for several years and helped fuel the mania.
5. Alan Greenspan is not a swami, but he is a hell of a lot smarter than the likes of Jim Rogers. Also he has never shown any lack of integrity, and I think he did the best he could.
6. If Greenspan HAD massively raised interest rates during the late 90's all you hypocrites criticizing him would have been the first people in the lynch mob after him.
1. Interest rates and money supply growth were neither high nor low during the bubble years, they were historically normal.
2. Major fundamental changes in business were occurring all during the 90's that caused massive optimism and unprecedented productivity growth. The future was bright and everything was possible. Psychologically we were ready to buy any tech stock that seemed to be a good idea. That is mania, and has nothing to do with interest rates or money supply.
3. In hindsight we can see that there was massive fraud occuring all during the late 90's that inflated earnings and revenue numbers for major corporations.
4. Momentum investing completely took over from fundamentally oriented investing. The greater fool theory worked well for several years and helped fuel the mania.
5. Alan Greenspan is not a swami, but he is a hell of a lot smarter than the likes of Jim Rogers. Also he has never shown any lack of integrity, and I think he did the best he could.
6. If Greenspan HAD massively raised interest rates during the late 90's all you hypocrites criticizing him would have been the first people in the lynch mob after him.
1] This is not true. What graphs are you looking at?
Weekly year over year growth of 15% in MZM is 'normal' to you?!?!
2] There was no fundamental change in business...you mean the productivity myth perpetuated by Greenie? the reason why people were buying was because as he himself put it:
"Once stock prices reach the point at which it is hard to value them by any logical methodology, stocks will be bought as they were in the late 1920s - not for investment, but to be unloaded at a still higher price. The ensuing break could be disastrous because panic psychology cannot be summarily altered or reversed by easy-money policies." [Alan Greenspan]
And also because he created the Greenspan Put. Remember that?
3] Greenie fought tooth and nail against the principle of regulation and oversight (although not accounting...in his case it was derivatives). The devastating result was LTCM and similar blow ups.
4] See Alan Greenspan's quote above. Also remember that he talked incessantly about the 'productivity miracle' that made stock price values normal. As well, he quoted the expectation of analysts to 'prove' that stocks and the economy would be fine. Remember that?
And finally, Greenspan could have killed 'momentum' investing or atleast slowed it down by pushing up margin rates (one of the three mechanisms at his disposal). But he didn't. His public excuse for not doing it by the way is assenine and the minute I heard it, I knew he was lying through his teeth.
"We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it." Alan Greenspan 1996
5] Alan Greenspan is only good at one thing: self preservation. He is especially astute at reading political winds (maybe he should have given Pitt a primer). One glaring example is when he suddenly switched his belief (held during Clinton's years) that reducing taxes was not good, when Bush came to office. He is one slippery and slimy bugger. How do you think he got where he is and kept himself there?!?!
6] That is what he is SUPPOSED to do!! darkhorse said it before and I'll say it again, central bankers are supposed to be hated, despised...that's how you know they are doing their jobs.
Weekly year over year growth of 15% in MZM is 'normal' to you?!?!
2] There was no fundamental change in business...you mean the productivity myth perpetuated by Greenie? the reason why people were buying was because as he himself put it:
"Once stock prices reach the point at which it is hard to value them by any logical methodology, stocks will be bought as they were in the late 1920s - not for investment, but to be unloaded at a still higher price. The ensuing break could be disastrous because panic psychology cannot be summarily altered or reversed by easy-money policies." [Alan Greenspan]
And also because he created the Greenspan Put. Remember that?
3] Greenie fought tooth and nail against the principle of regulation and oversight (although not accounting...in his case it was derivatives). The devastating result was LTCM and similar blow ups.
4] See Alan Greenspan's quote above. Also remember that he talked incessantly about the 'productivity miracle' that made stock price values normal. As well, he quoted the expectation of analysts to 'prove' that stocks and the economy would be fine. Remember that?
And finally, Greenspan could have killed 'momentum' investing or atleast slowed it down by pushing up margin rates (one of the three mechanisms at his disposal). But he didn't. His public excuse for not doing it by the way is assenine and the minute I heard it, I knew he was lying through his teeth.
"We do have the possibility of raising major concerns by increasing margin requirements. I guarantee that if you want to get rid of the bubble, whatever it is, that will do it." Alan Greenspan 1996
5] Alan Greenspan is only good at one thing: self preservation. He is especially astute at reading political winds (maybe he should have given Pitt a primer). One glaring example is when he suddenly switched his belief (held during Clinton's years) that reducing taxes was not good, when Bush came to office. He is one slippery and slimy bugger. How do you think he got where he is and kept himself there?!?!
6] That is what he is SUPPOSED to do!! darkhorse said it before and I'll say it again, central bankers are supposed to be hated, despised...that's how you know they are doing their jobs.
Dotslash:
Your ignorance is showing bigtime. I'm not blaming any stock market losses on Greenspan because I didn't take any. Neither did Fleckenstein and I lay you 100 to 1 odds neither did Jim Rogers. I don't understand where an assumption like that would come from. Put it back where it came from please.
1) Yes, the interest rate situation was BENIGN for the 90's, i.e. everything was peachy, i.e. we had the goldilocks conditions (not too hot, not too cold) necessary to foment a bubble.
2) Everything you cite in number two, EVERY WORD OF IT, happened in the 1920's. Down to the last letter- just replace "90s" and "tech stock." If that is not a case of history repeating itself I don't know what is. Also: "manias have nothing to do with interest rates or money supply?" You have no idea what you're talking about. George Soros says the most important fundamental is credit flows, i.e. the flow of money which is in turn linked to lending which is in turn linked to money supply and interest rates. Milton Friedman, a nobel prize winner who makes more sense than 95% of his fellow economists and was decades ahead of his time also happens to believe that price levels are entirely dependent on the money supply. Which was controlled by guess who.
3) Massive fraud is a byproduct of bubbles, a result of bubbles, not a cause. Fraud goes with bubbles like fleas on a dog because good managers are sucked into bad decisions in an effort to catch up with the shadiest operators getting truckloads of money thrown at them. For example why did so many utilities throw caution to the wind and get involved in idiotic energy pricing schemes? Because they were trying to catch up with Enron. Why was Enron valued so highly in the first place? Because bubblevision had people thinking that Enron was making a zillion dollars a minute trading weather and broadband futures.
4) Yes, momentum investing took over, AS IT ALWAYS DOES in manias. Again, this is a result of the bubble not a cause of this. Now, let's retrace our steps: who knew full well that momentum investing is a clear sign of a bubble? Who voiced that thought thirty years ago, and again in 1996, but chose to shut his eyes to it?
5) You have got to be kidding me. I have no idea what Greenspan's IQ is and I don't care, because this isn't about smarts. But to dis Rogers is just flat out ignorant. This is a guy who worked side by side with George Soros, who helped lay the foundations of the Quantum fund, who is probably a billionaire in his own right, who trades a broad cross section of world markets to this day, and who is so deeply versed in market history that he could tell you the intimate details of the 1865 cotton panic, on the spot, without referencing notes. And you want to tell me that Greenspan is "a hell of a lot smarter?" You are completely clueless as to what you speak.
6) Once again you don't even know what you were talking about. He didn't have to raise interest rates, because inflation wasn't the problem. The problem was a mania of excessive speculation to the extreme brought on by a self reinforcing feedback loop of greed and temporary insanity. Just like we have seen before, and just like Greenspan had the tools to recognize. Just like he DID recognize in 1996, and spoke up on, and then decided to shut up. He could have raised margin rates, he could have used the power of authority and voiced his concerns to a public hanging on his every word, he could have pointed out the obvious danger signs, he could have done a whole lot of things. But he chose to do nothing at all. And once again, I was saying the same thing years ago, before everything went down. So were plenty of others.
Fleckenstein and Rogers and Grant are not johnny come latelies. They are objective students of market history and they saw this coming from a hundred miles away. So did Greenspan, for that matter, but he chose to embrace popularity rather than do the right thing. A leader with moral integrity would sacrifice their own popularity before allowing their charges to head over a cliff.
When it comes down to it, making unpopular decisions and being the voice of reason is what leadership is all about. It's easy to make your constituents happy and give them what they want. Telling them what they don't want to hear when they need to hear it is where the rubber meets the road. And that is where Greenspan failed.
I really don't understand you Greenspan apologists. This is not rocket science. Economics is eminently understandable if you study it and think deeply about the inner workings of it. The principles we are talking about here are not high level calculus. The sniveling idea that we are not "smart" enough or "trained" enough to critique "the great man" is complete and utter bullshit. I will get on a podium and debate with a Harvard Economist on this stuff, you don't need quadratic equations to grasp the workings of supply and demand and credit and human nature and repeated patterns of excess. I've been reading about economics and studying all manner of economic principles for seven years now. And it boils down to logic and common sense, as taught by history and observation, that Greenspan fell down on the job. And because he chose to shirk his duty, he has HURT people. This is why I am so pissed off at him. When Joe Blow shirks his duty, he may hurt himself or hurt his family. When a leader of the country and a prominent figure in the free world shirks his duty, he can seriously screw over a LOT of people. No he is not a deity, and no this mess is not entirely his fault, but YES he demonstrated a GROSS lack of responsiblity and a REPREHENSIBLE ineptitude and he is worthy of the blame he gets for that.
Your ignorance is showing bigtime. I'm not blaming any stock market losses on Greenspan because I didn't take any. Neither did Fleckenstein and I lay you 100 to 1 odds neither did Jim Rogers. I don't understand where an assumption like that would come from. Put it back where it came from please.
1) Yes, the interest rate situation was BENIGN for the 90's, i.e. everything was peachy, i.e. we had the goldilocks conditions (not too hot, not too cold) necessary to foment a bubble.
2) Everything you cite in number two, EVERY WORD OF IT, happened in the 1920's. Down to the last letter- just replace "90s" and "tech stock." If that is not a case of history repeating itself I don't know what is. Also: "manias have nothing to do with interest rates or money supply?" You have no idea what you're talking about. George Soros says the most important fundamental is credit flows, i.e. the flow of money which is in turn linked to lending which is in turn linked to money supply and interest rates. Milton Friedman, a nobel prize winner who makes more sense than 95% of his fellow economists and was decades ahead of his time also happens to believe that price levels are entirely dependent on the money supply. Which was controlled by guess who.
3) Massive fraud is a byproduct of bubbles, a result of bubbles, not a cause. Fraud goes with bubbles like fleas on a dog because good managers are sucked into bad decisions in an effort to catch up with the shadiest operators getting truckloads of money thrown at them. For example why did so many utilities throw caution to the wind and get involved in idiotic energy pricing schemes? Because they were trying to catch up with Enron. Why was Enron valued so highly in the first place? Because bubblevision had people thinking that Enron was making a zillion dollars a minute trading weather and broadband futures.
4) Yes, momentum investing took over, AS IT ALWAYS DOES in manias. Again, this is a result of the bubble not a cause of this. Now, let's retrace our steps: who knew full well that momentum investing is a clear sign of a bubble? Who voiced that thought thirty years ago, and again in 1996, but chose to shut his eyes to it?
5) You have got to be kidding me. I have no idea what Greenspan's IQ is and I don't care, because this isn't about smarts. But to dis Rogers is just flat out ignorant. This is a guy who worked side by side with George Soros, who helped lay the foundations of the Quantum fund, who is probably a billionaire in his own right, who trades a broad cross section of world markets to this day, and who is so deeply versed in market history that he could tell you the intimate details of the 1865 cotton panic, on the spot, without referencing notes. And you want to tell me that Greenspan is "a hell of a lot smarter?" You are completely clueless as to what you speak.
6) Once again you don't even know what you were talking about. He didn't have to raise interest rates, because inflation wasn't the problem. The problem was a mania of excessive speculation to the extreme brought on by a self reinforcing feedback loop of greed and temporary insanity. Just like we have seen before, and just like Greenspan had the tools to recognize. Just like he DID recognize in 1996, and spoke up on, and then decided to shut up. He could have raised margin rates, he could have used the power of authority and voiced his concerns to a public hanging on his every word, he could have pointed out the obvious danger signs, he could have done a whole lot of things. But he chose to do nothing at all. And once again, I was saying the same thing years ago, before everything went down. So were plenty of others.
Fleckenstein and Rogers and Grant are not johnny come latelies. They are objective students of market history and they saw this coming from a hundred miles away. So did Greenspan, for that matter, but he chose to embrace popularity rather than do the right thing. A leader with moral integrity would sacrifice their own popularity before allowing their charges to head over a cliff.
When it comes down to it, making unpopular decisions and being the voice of reason is what leadership is all about. It's easy to make your constituents happy and give them what they want. Telling them what they don't want to hear when they need to hear it is where the rubber meets the road. And that is where Greenspan failed.
I really don't understand you Greenspan apologists. This is not rocket science. Economics is eminently understandable if you study it and think deeply about the inner workings of it. The principles we are talking about here are not high level calculus. The sniveling idea that we are not "smart" enough or "trained" enough to critique "the great man" is complete and utter bullshit. I will get on a podium and debate with a Harvard Economist on this stuff, you don't need quadratic equations to grasp the workings of supply and demand and credit and human nature and repeated patterns of excess. I've been reading about economics and studying all manner of economic principles for seven years now. And it boils down to logic and common sense, as taught by history and observation, that Greenspan fell down on the job. And because he chose to shirk his duty, he has HURT people. This is why I am so pissed off at him. When Joe Blow shirks his duty, he may hurt himself or hurt his family. When a leader of the country and a prominent figure in the free world shirks his duty, he can seriously screw over a LOT of people. No he is not a deity, and no this mess is not entirely his fault, but YES he demonstrated a GROSS lack of responsiblity and a REPREHENSIBLE ineptitude and he is worthy of the blame he gets for that.
Darkhorse, you and a few others are dead on. It all boils down to who reads fleck/rogers/grant, and those who don't. You have to read these people to understand the world. For those of you who like to read (I am one), I highly recommend reading "Manias, Panics and Crashes (A history of financial crises)" by Charles P. Kindleberger. He is a bit worthy, but this thome is the authoriative book on the creation and effects of bubbles throughout history. It gives hundreds of examples of bubbles of every type over the past 500+ years. They almost all exhibit the same signs, even though many occur in different countries and cultures. Anyone who wants to discuss bubbles cannot do so on equal footing with someone who has read this book, and I highly recommend that you do read it.
- A number of people have pointed to technology, and the increases in productivity (greenspan sited both quite quite quite often). These are all crap. Anyone who reads Fleck, will know that our country's rate of productivity growth many times more productive in the 50's, and the 60's than now.
Finally, technology is something that should give companies an inferior valuation in most cases. I never understood why people gave them higher valuations. If you read ch 5 in the book I just mentioned, it deals in the emergence of swindles. I recommend that you borrow the book from your local library and read at least that chapter. You'll understand how they convinced us that technology was good for us, just like ponzi convinced us that he could arb a spread in stamps.
- A number of people have pointed to technology, and the increases in productivity (greenspan sited both quite quite quite often). These are all crap. Anyone who reads Fleck, will know that our country's rate of productivity growth many times more productive in the 50's, and the 60's than now.
Finally, technology is something that should give companies an inferior valuation in most cases. I never understood why people gave them higher valuations. If you read ch 5 in the book I just mentioned, it deals in the emergence of swindles. I recommend that you borrow the book from your local library and read at least that chapter. You'll understand how they convinced us that technology was good for us, just like ponzi convinced us that he could arb a spread in stamps.
that sounds as though it was addressed to me somewhat. so you can drop the charade of having me on ignore dark, cos i know you're reading this.
it's not complete and utter bullshit at all. i contend that the vast majority on this board wouldn't know jack about economics.
now you, genius, may very well have a sufficient understanding of the situation to provide us with an intelligent critique of Greenspan's actions, but when you go off spouting that you'll take on any harvard professor on economic policy i just have to laugh. only a monday morning quarter back with a track record in pretending to have more than a layman's understanding of every single subject that is broached on these boards makes that kind of a claim.
P2. Please. go back and reread what you wrote buddy. it's got so many holes it makes swiss cheese look good.
I find it interesting that Greenspan seems to have emerged as the icon for all that went wrong. I agree that he brought some of it on himself by becoming a celebrity central banker, and not really going out of his way to disavow the plaudits thrown at him. As I said before however, I think the real culprits were Robert Rubin and the Clinton administration officials who sought to defer every crisis that arose on their watch by massive bailouts that were handed over to Greenspan to finance.
So Greenspan deserves some blame. But he did not engineer the massive frauds at Enron, Worldcom or Tyco. He did not mastermind the IPO frauds perpetrated by the Wall Street investment banks. Mary Meeker was not on his payroll, neither was Jack Grubman. The Fed does not have regulatory authority over IPO's or corporate reporting. That would reside in the SEC. The SEC under Arthur Levitt did a lot ot help us daytraders, but it apparently missed a much bigger problem of corporate fraud and underwriting scams that ultimately cost the public billions.
I well remember the arguments in the '98-'00 period about what the Fed should do. The Fed's statutory authority is limited to controlling inflation and facilitating full employment. It has no responsibility for stock market prices. It is easy to argue now that productivity was not a sgreat as it appeared, but the Fed had to use the data it had at the time. On balance, I would rather the Fed err on the side of encouraging new technologies and investment rather than choking them off because of subjective concerns about stock prices. As for Jim Grant, Fleck and their crowd, they were dead wrong for up to 20 years. What makes them such greath seers or suddenly turns them into oracles now?
So Greenspan deserves some blame. But he did not engineer the massive frauds at Enron, Worldcom or Tyco. He did not mastermind the IPO frauds perpetrated by the Wall Street investment banks. Mary Meeker was not on his payroll, neither was Jack Grubman. The Fed does not have regulatory authority over IPO's or corporate reporting. That would reside in the SEC. The SEC under Arthur Levitt did a lot ot help us daytraders, but it apparently missed a much bigger problem of corporate fraud and underwriting scams that ultimately cost the public billions.
I well remember the arguments in the '98-'00 period about what the Fed should do. The Fed's statutory authority is limited to controlling inflation and facilitating full employment. It has no responsibility for stock market prices. It is easy to argue now that productivity was not a sgreat as it appeared, but the Fed had to use the data it had at the time. On balance, I would rather the Fed err on the side of encouraging new technologies and investment rather than choking them off because of subjective concerns about stock prices. As for Jim Grant, Fleck and their crowd, they were dead wrong for up to 20 years. What makes them such greath seers or suddenly turns them into oracles now?