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January 31, 2006

Don’t Let the Door Hit You in the Ass on the Way Out!

Reading a profile on outgoing Fed Chairman Alan Greenspan today I was glad to see that not every one is still in thrall to him. The article was in the New Yorker a literary magazine and which struck me as “more” real than what one finds in the Wall Street Journal, Businessweek, and other such publications.

“If Greenspan remains popular,” says the New Yorker article,“it’s because his ministrations have made many middle-class homeowners millionaires—at least on paper. But the economy is chronically unbalanced. Like an athlete on steroids, it is ailing from the inside. The United States has a negative personal-savings rate; an immense budget shortfall, which will expand as the baby boomers retire; a trade deficit greater than Russia’s gross domestic product. As a country, we are living far beyond our means. Every working day, we borrow more than three billion dollars from foreigners, notably the central banks of China and other Asian nations, in order to pay our import bills and keep our interest rates low.”

Greenspan presided over two huge imbalances in his 18 year tenure; The dot com bubble of the 90’s and the housing bubble right now. And if you think the bubble bursting before was bad what’ll happen when all those middle class “real estate millionaires” having blown all their equity now find that the gravy train has left and their gonna have to pay it all off and they can’t refi any more?

We will see, eh Alan?

Posted by Ali Massoud at January 31, 2006 11:28 PM

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