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DeLong, march!

By Owen Paine on Wednesday September 19, 2007 04:30 PM


It's not surprising that Ole Possum Brad Delong jumped aboard the Greenspan retro express – so has everyone else, from NPR's Philly thistle lady to Jon-boy Stewart.

But then again, Mr Delong is an expert on macro high policy. Hence his well-placed recent review in the LA Times of Herr Poison Pill's ghosted memoirs. To his everlasting discredit, Brad's taken this opportunity to produce a work of wondrous blend -- a toast to the great man, hoisting a cocktail glass filled to the brim with a pusillanimous mix of pomposity and cop-out humility.

Here's an example: according to Brad, he, the great Delong, was outthought, outjudged, out-wisdom'd by the fearless Fosdick of fiat credit 5 out of 6 times on key turning points in credit policy. Yup, Greenglue got it "right" 5 out of the 6 times these two mighty heads disagreed on "direction".

Now of course they mostly agreed. In fact, 30 out of 36 times they agreed, during Alan's 18 years at the Fed's tiller, but the one time Brad was right and Alan wrong finally came in the summer of '00 after the dot.com.pop. When Greeny "waited for more information to see how much the fall in stock-market values would affect high-tech investment spending before he acted," Brad would have dropped his rate pants right then and there, not waiting for the inevitable thud of falling corporate plant and equipment expenditures.

(NB: Alan waited much as gentle Ben "waited" after the mortgage pop, when we all knew it would affect housing construction.)

Here's Brad on the two times he figures Greenspan fucked up big-time -- the twin bubbles, tech stocks in the late 90's and house lots in the early 00's: “[These]two counts could be considered economic felonies.” Greeny claims he faced a cruel policy dilemma. According to Brad, Greeny figured

... he could have aborted the stock market and housing bubbles of the late 1990s and the early 2000s but only by paying an unacceptable price in idled factories and unemployed workers.
What? pre-empting both bubbles would have brought on the same horror the pre-emptions were expected to prevent? Stop this system, I want to get off.

Here's Brad's take: "He may be right and he may be wrong in this judgment -- I don't know .... Imagine! Here's Mister Blabbermouth ready with a bold opinion on everything under the midday sun, now faced with a real deep test of his science and he -- what -- he plops out totally!

The whys of this sudden drymouth Sergeant Schultz-like "I know nossing, nossing" are prolly best left to the cui-bono boys to weave into a nice squalid pattern. I'll merely suggest even a casual look at any halfway detailed flow chart of how credit streams into both these "investment sectors" indicates several very clear, very simple, but profoundly efficacious cinch points, where pre-emption of market bubbles is possible way before they even emerge. Policies and regultion that are bubble prevention methods can be done – Hell, I could do it, it's that easy.

Smart market-specific timely regulatory interventions in the tech stock market and the house lot market in both cases would have removed the threat before either had a chance to blast the real economy. But then again, these mad Paine-type interventions would also pre-empt any sly moves by all those sharp fellahs out there, ever ready to exploit new wrinkles and loops to make additional tons of speculative fraudulent and sterile money.

After all, in the last analysis, it's not about the economy, stupid – not at all -- is it? It's about headline profit players, both winners and losers. It's ultimately all about the top carny's boodle, and not a bit about the bottom rubes' pocket holes.

Comments (1)


only gem here

".....Nixon wasn't just anti-Semitic, Greenspan tells us, but anti-everyone: "I don't know anybody he was pro." ....."

ahh RN ....now that's greatness

hillary attendez

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