Greenspan: A Charlatan Unmasked

Life is very good – if you’re Alan Greenspan. He was the “architect” of the U.S. “dot-com” bubble, and clearly laid the foundation for the subsequent U.S. housing bubble. These two, enormous asset-bubbles made a lot of bankers obscenely wealthy, while laying-waste to the U.S. economy.

Despite this ignominy, Greenspan is able to flit from one highly-paid speaking engagement to another, like some kind of Teflon butterfly. Since he invariably shows up only at venues filled with sympathetic audiences, he rarely has to face a single “hard question” – let alone any hint of hostility.

In a recent Greenspan appearance on NBC’s “Meet the Press”, the stench of hypocrisy and revisionism emanating from Greenspan was positively nauseating. Greenspan began by posing as a born-again, “fiscal conservative”. Meanwhile, back in the real world, Federal Reserve Chairman Greenspan was the originator of near-zero interest rates – rates lower than anything seen in the history of our modern economy.

The reason that our societies have never seen such reckless interest rates at any time prior to this is because it is absolutely inevitable that excessively low interest rates cause debt-levels to soar exponentially, along with inflation/asset prices – and these factors inevitably lead to destructive asset bubbles. Given that Greenspan’s interest rates were (at the time) the most reckless in history, it is no surprise at all that they led to the largest asset-bubbles in history, despite all the experts who claimed to be “surprised” by the inevitable (including Greenspan, himself).

Compounding this monetary-madness was the fiscal suicide of the Bush regime, who gifted the wealthiest Americans with the largest tax-cuts (for the wealthy) in the history of any major economy. Given that the U.S. economy was incapable of running a “balanced budget” prior to the tax cuts, they had the effect of creating a massive, structural deficit in the U.S. economy.

Ever the servant of the wealthy while he ran the Federal Reserve, Greenspan never had a single word of criticism about this insane, multi-trillion dollar present for ultra-wealthy Americans – who were already taxed at a far lower rate than in any other Western economy before the Bush tax-cuts. Now, (after the damage is done) we hear Greenspan spouting lines like:

“...I’m very much in favor of tax-cuts, but not with borrowed money. And the problem we’ve gotten into in recent years [i.e. the “Greenspan years”] is spending programs with borrowed money, tax cuts with borrowed money, and at the end of the day that proved disastrous.”

More specifically, it follows the classic Greenspan-pattern: lie in the present, then (after events have totally refuted the initial deceptions) he simply states the obvious, in hindsight – and then pretends that he never held views contrary to this. The quote above clearly illustrates this.

Proving that he is still engaging in this pattern of lies-and-revisionism, we need only refer to Greenspan’s remarks on the current condition of the U.S. housing sector.

“Home prices, as best we can judge, have really flattened out in the last year. And while it is true that most economists expect a small dip from here, largely as a consequence of the ending of the tax credit, the data don’t show that at this particular stage. If home prices stay stable, then I think we will skirt the worst of the housing problem.”

Regular readers will immediately reject this statement as utter nonsense. As I stated (and demonstrated) in “The Second Bubble Bursts”, not only have “new home sales” fallen off a cliff, but all of the U.S. housing data has turned negative. However, far beyond that, it has been common knowledge that ever since the U.S. financial crime syndicate wrote-up trillions of dollars worth of “liar’s loans” that there would be a serious crash in the housing sector, when $100’s of billions in “option-ARM” mortgages reset – with the biggest spike in those resets beginning in the spring of 2010.

Unless we are to conclude that Greenspan is simply senile, and no longer capable of retaining data, he knows this, and has known it for years. His ridiculous posturing about ‘crossing our fingers and hoping for the best’ lacks even an iota of sincerity, since he not only knows the next crash is inevitable – but that it has already begun.