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Friday, July 25, 2014 1:42:16 AM
Paul B. Farrell
July 24, 2014, 9:33 a.m. EDT
Great Crash of 2016, third $10 trillion loss this century
Commentary: Greenspan’s ‘black box’ syndrome now handicaps Yellen
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By Paul B. Farrell, MarketWatch
Sometime after the Great Crash of 2016, Fed Chairwoman Janet Yellen will be testifying before Congress, just like Alan Greenspan was forced to do in 2008. She will be explaining why America has already had three megacrashes in the 21st Century, each draining roughly $10 trillion, each a direct result of Federal Reserve policy failures. She will be forced to explain why the Great Crash of 2016 was a clone of the bank credit crash of 2008 and the 2000 excesses.
Getty Images
Former Federal Reserve Chairman Alan Greenspan.
But we already know exactly what Yellen will be forced to admit: That she is a clone of Alan Greenspan, who was a perfect clone of capitalism’s patron saints, Milton Friedman and Ayn Rand, going back decades. To fully understand this self-destructive lineage, simply focus your laser on the one admission Greenspan made to Congress in 2008, eight words that explain why Greenspan’s bizarre capitalism failed and why it will happen again and again under Yellen ... “I really didn’t get it until very late.”
No, you don’t have to be a neuroscientist, psychologist or behavioral-finance genius to understand what Greenspan was saying, in this confession to Congress, to American investors, the whole world:
Greenspan says capitalism was working just fine ... in his head ... for decades ... then suddenly, capitalism stopped working ... capitalism exploded in his face ... capitalism is a bubble machine ... very predictable bear-bull cycles ... and a bad habit of exploding ... just when you hope to get just a little richer ... but instead, capitalism’s bubble explodes ... triggering trillions in losses ... did it in 2000, again in 2008, certain to repeat around 2016 ...
He was on the job 18 years, Not enough. Unfortunately the esteemed head of our monetary system never “really got it until very late.” Capitalists never do “get it.” Never will get it. Neither does Yellen, she’s just a clone of robotic Greenspan. It’s the curse of capitalist leaders.
Greenspan was rigid, dogmatic, ideological, misleading 95 million American investors and billions worldwide for 18 years as de facto head of the world’s monetary system. His book “Age of Turbulence” netted him a nice $8.5 million, lots of speaking and consulting fees. But the stock market he left behind crashed in 2008 with investors losing over $10 trillion in market cap, on top of the trillions lost earlier in 2000 during the middle of his tenure as Fed chairman.
So put it on your calendar, a new bubble is certain to explode in Yellen’s face by 2016 with trillions more market cap lost.
Greenspan ‘black box’ syndrome infected Bernanke, then Yellen’s brain
The “Greenspan black box,” a neural data recorder, saved everything in his brain for the past 40 years. And you don’t have to be a neuroscientist, psychologist and behavioral economist to analyze the data is in Greenspan’s brain, with contrarian evidence there, but hidden. That’s why he said: “I really didn’t get it until very late.” The risks were actually in his neural system, but isolated and ignored ... till too late.
Yes, our Fed leaders’ brains know their capitalist dogma has stopped working but can’t admit it, hang on to a failing system rather than moving on. Greenspan tried, confessed: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.” But Bernanke, and now Yellen still prop up America’s failing capitalism.
But while the facts were there, Greenspan’s brain blocked the warnings: “I really didn’t get it until very late,” too late to change course. It took the 2008 exploding bubble before Greenspan was shocked awake. Then, finally aware his 40-year theories of capitalism weren’t working, Greenspan admitted to the world: “Yes, I found a flaw, that’s precisely the reason I was shocked because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
For 40 years his capitalist brain favored ideology over facts ... beginning back in the 1960s, a couple decades before Reagan appointed him Fed chairman and he served from 1987 until early 2006 ... while he advised four American presidents ... while congressional leaders trusted his judgment and guidance ... while central banks worldwide hung on his every word for 18 long years ... as capitalists called him “Maestro” and “Rock Star.” Yes, Alan Greenspan was the great oracle of capitalism for investors worldwide.
Capitalism works? Bubbles, crashes, cycle repeats ... who can’t “get it?”
Then, after 40 years, something bad happened ... capitalism stopped working. So let’s rerun Greenspan’s tape, analyze it in our neural brain translator. The setting: Greenspan in Washington, a few years after he left the Federal Reserve.
Time stamp: October 2008, just days before the McCain-Obama presidential elections. A time GOP conservative easily forget. Wall Street, banks, financial markets crashing, chaos, economies failing, governments bankrupt. As Greenspan was testifying to the U.S. Congresss
Translation: “Yes, I found a flaw in capitalism ... and I was shocked ... for over four decades, 40 years ... my brain had been collecting massive evidence proving beyond a reasonable doubt to my satisfaction that capitalism was working incredibly well ... but then capitalism crashed ... yes, even as head of the American and world monetary system, impacting all economies ... I just didn’t get it until too late.”
Our translator continues with Greenspan: “Yes, it took me 40 years of working with the economics of capitalism, using theories learned from great capitalist brains like Nobel economist Milton Friedman, author of “Capitalism and Freedom,” and conservative philosopher Ayn Rand, author of classics “Atlas Shrugged” and “The Fountainhead,” a long-time personal friend and mentor who once said, ‘when I say capitalism, I mean a pure, uncontrolled, unregulated laissez-faire capitalism,’ I, Alan Greenspan, was certain capitalism was working perfectly ... until the capitalism just stopped working in 2008.”
Sadly, Greenspan “really didn’t get it until too late to stop the crash ... didn’t get that free market capitalism was seriously flawed.” Get it? Capitalism’s failed twice and will certainly fail a third time in the 21st century. Will we ever learn? Will our leaders ever get it? Or will they keep driving us past the point of no return?
Bottom line: What Greenspan missed: Fact-cycles beat theory-ideology
What was it Greenspan, Bernanke, now Yellen never “get?” Very simple, the facts. Our Fed leaders not only favor big banks, billionaires, CEOs and insiders, but they simply ignore the facts that capital markets move in predictable cycles. Markets work until they don’t work. Rise to a peak. Explode. Crash. Bears naturally follow bulls. This time is never different. There is no perpetual money machine for capitalist. Facts always trump ideology.
Capitalism is a bubble machine. It blows bubbles. Pretty bubbles that inevitably explode. Then the cycle repeats and repeats and repeats in a statistically predictable pattern. Greenspan missed it in 2008. And, unfortunately, Yellen will miss it in 2016.
Still, the cycles have very well-known pattern: As Investors Business Daily publisher Bill O’Neil summarized in his classic, “How to Make Money in Stocks,” for the past century the average bull cycle runs for an average of 3.75 years. Then falls into a bear for an average nine months. And since it skipped 2013, experts like Jeremy Grantham, founder of the $118 billion GMO money-management firm, is predicting another huge multitrillion dollar crash, a repeat of 2000 and 2008. It will hit us around the next presidential election in 2016.
Although the average human knows capitalism dogma is seriously flawed, our Fed leaders will just keep spreading it, till it’s too late to stop capitalism’s kamikaze trajectory. Worse, there are no incentives to change the system Adam Smith invented and Greenspan, Rand and Friedman have distorted. Quite the contrary, today’s dysfunctional inequality-breeding capitalism keeps getting stronger: Why? Dodd-Frank reforms are dying as the collective power of America’s too-big-too-fail banks, hedge funds, CEOs and private-equity firms keeps growing, protected by anti-government politicians, do-nothing conservatives, weak Democrats, but most of all, a new capitalism where fewer than 100 billionaires own more than half the assets in the entire world.
Eight words that define capitalism: “I really didn’t get it until very late”
Yes, those 8 words say it all: “I really didn’t get it until very late.” That’s capitalism, a game of musical chairs. Admit nothing, till after a collapse. Thanks to the capitalist theories of Friedman and Rand, Greenspan was destined to fail America for 18 long years, is still claiming he didn’t “get it” till too late. Then Bernanke. Now it’s Yellen’s turn. America’s monetary leaders just don’t get it ... and they never will ... until it’s too late ... except next time capitalism implodes, taking American markets and the global economy into a big black hole, forever.
Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell.
July 24, 2014, 9:33 a.m. EDT
Great Crash of 2016, third $10 trillion loss this century
Commentary: Greenspan’s ‘black box’ syndrome now handicaps Yellen
Stories You Might Like
By Paul B. Farrell, MarketWatch
Sometime after the Great Crash of 2016, Fed Chairwoman Janet Yellen will be testifying before Congress, just like Alan Greenspan was forced to do in 2008. She will be explaining why America has already had three megacrashes in the 21st Century, each draining roughly $10 trillion, each a direct result of Federal Reserve policy failures. She will be forced to explain why the Great Crash of 2016 was a clone of the bank credit crash of 2008 and the 2000 excesses.
Getty Images
Former Federal Reserve Chairman Alan Greenspan.
But we already know exactly what Yellen will be forced to admit: That she is a clone of Alan Greenspan, who was a perfect clone of capitalism’s patron saints, Milton Friedman and Ayn Rand, going back decades. To fully understand this self-destructive lineage, simply focus your laser on the one admission Greenspan made to Congress in 2008, eight words that explain why Greenspan’s bizarre capitalism failed and why it will happen again and again under Yellen ... “I really didn’t get it until very late.”
No, you don’t have to be a neuroscientist, psychologist or behavioral-finance genius to understand what Greenspan was saying, in this confession to Congress, to American investors, the whole world:
Greenspan says capitalism was working just fine ... in his head ... for decades ... then suddenly, capitalism stopped working ... capitalism exploded in his face ... capitalism is a bubble machine ... very predictable bear-bull cycles ... and a bad habit of exploding ... just when you hope to get just a little richer ... but instead, capitalism’s bubble explodes ... triggering trillions in losses ... did it in 2000, again in 2008, certain to repeat around 2016 ...
He was on the job 18 years, Not enough. Unfortunately the esteemed head of our monetary system never “really got it until very late.” Capitalists never do “get it.” Never will get it. Neither does Yellen, she’s just a clone of robotic Greenspan. It’s the curse of capitalist leaders.
Greenspan was rigid, dogmatic, ideological, misleading 95 million American investors and billions worldwide for 18 years as de facto head of the world’s monetary system. His book “Age of Turbulence” netted him a nice $8.5 million, lots of speaking and consulting fees. But the stock market he left behind crashed in 2008 with investors losing over $10 trillion in market cap, on top of the trillions lost earlier in 2000 during the middle of his tenure as Fed chairman.
So put it on your calendar, a new bubble is certain to explode in Yellen’s face by 2016 with trillions more market cap lost.
Greenspan ‘black box’ syndrome infected Bernanke, then Yellen’s brain
The “Greenspan black box,” a neural data recorder, saved everything in his brain for the past 40 years. And you don’t have to be a neuroscientist, psychologist and behavioral economist to analyze the data is in Greenspan’s brain, with contrarian evidence there, but hidden. That’s why he said: “I really didn’t get it until very late.” The risks were actually in his neural system, but isolated and ignored ... till too late.
Yes, our Fed leaders’ brains know their capitalist dogma has stopped working but can’t admit it, hang on to a failing system rather than moving on. Greenspan tried, confessed: “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.” But Bernanke, and now Yellen still prop up America’s failing capitalism.
But while the facts were there, Greenspan’s brain blocked the warnings: “I really didn’t get it until very late,” too late to change course. It took the 2008 exploding bubble before Greenspan was shocked awake. Then, finally aware his 40-year theories of capitalism weren’t working, Greenspan admitted to the world: “Yes, I found a flaw, that’s precisely the reason I was shocked because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
For 40 years his capitalist brain favored ideology over facts ... beginning back in the 1960s, a couple decades before Reagan appointed him Fed chairman and he served from 1987 until early 2006 ... while he advised four American presidents ... while congressional leaders trusted his judgment and guidance ... while central banks worldwide hung on his every word for 18 long years ... as capitalists called him “Maestro” and “Rock Star.” Yes, Alan Greenspan was the great oracle of capitalism for investors worldwide.
Capitalism works? Bubbles, crashes, cycle repeats ... who can’t “get it?”
Then, after 40 years, something bad happened ... capitalism stopped working. So let’s rerun Greenspan’s tape, analyze it in our neural brain translator. The setting: Greenspan in Washington, a few years after he left the Federal Reserve.
Time stamp: October 2008, just days before the McCain-Obama presidential elections. A time GOP conservative easily forget. Wall Street, banks, financial markets crashing, chaos, economies failing, governments bankrupt. As Greenspan was testifying to the U.S. Congresss
Translation: “Yes, I found a flaw in capitalism ... and I was shocked ... for over four decades, 40 years ... my brain had been collecting massive evidence proving beyond a reasonable doubt to my satisfaction that capitalism was working incredibly well ... but then capitalism crashed ... yes, even as head of the American and world monetary system, impacting all economies ... I just didn’t get it until too late.”
Our translator continues with Greenspan: “Yes, it took me 40 years of working with the economics of capitalism, using theories learned from great capitalist brains like Nobel economist Milton Friedman, author of “Capitalism and Freedom,” and conservative philosopher Ayn Rand, author of classics “Atlas Shrugged” and “The Fountainhead,” a long-time personal friend and mentor who once said, ‘when I say capitalism, I mean a pure, uncontrolled, unregulated laissez-faire capitalism,’ I, Alan Greenspan, was certain capitalism was working perfectly ... until the capitalism just stopped working in 2008.”
Sadly, Greenspan “really didn’t get it until too late to stop the crash ... didn’t get that free market capitalism was seriously flawed.” Get it? Capitalism’s failed twice and will certainly fail a third time in the 21st century. Will we ever learn? Will our leaders ever get it? Or will they keep driving us past the point of no return?
Bottom line: What Greenspan missed: Fact-cycles beat theory-ideology
What was it Greenspan, Bernanke, now Yellen never “get?” Very simple, the facts. Our Fed leaders not only favor big banks, billionaires, CEOs and insiders, but they simply ignore the facts that capital markets move in predictable cycles. Markets work until they don’t work. Rise to a peak. Explode. Crash. Bears naturally follow bulls. This time is never different. There is no perpetual money machine for capitalist. Facts always trump ideology.
Capitalism is a bubble machine. It blows bubbles. Pretty bubbles that inevitably explode. Then the cycle repeats and repeats and repeats in a statistically predictable pattern. Greenspan missed it in 2008. And, unfortunately, Yellen will miss it in 2016.
Still, the cycles have very well-known pattern: As Investors Business Daily publisher Bill O’Neil summarized in his classic, “How to Make Money in Stocks,” for the past century the average bull cycle runs for an average of 3.75 years. Then falls into a bear for an average nine months. And since it skipped 2013, experts like Jeremy Grantham, founder of the $118 billion GMO money-management firm, is predicting another huge multitrillion dollar crash, a repeat of 2000 and 2008. It will hit us around the next presidential election in 2016.
Although the average human knows capitalism dogma is seriously flawed, our Fed leaders will just keep spreading it, till it’s too late to stop capitalism’s kamikaze trajectory. Worse, there are no incentives to change the system Adam Smith invented and Greenspan, Rand and Friedman have distorted. Quite the contrary, today’s dysfunctional inequality-breeding capitalism keeps getting stronger: Why? Dodd-Frank reforms are dying as the collective power of America’s too-big-too-fail banks, hedge funds, CEOs and private-equity firms keeps growing, protected by anti-government politicians, do-nothing conservatives, weak Democrats, but most of all, a new capitalism where fewer than 100 billionaires own more than half the assets in the entire world.
Eight words that define capitalism: “I really didn’t get it until very late”
Yes, those 8 words say it all: “I really didn’t get it until very late.” That’s capitalism, a game of musical chairs. Admit nothing, till after a collapse. Thanks to the capitalist theories of Friedman and Rand, Greenspan was destined to fail America for 18 long years, is still claiming he didn’t “get it” till too late. Then Bernanke. Now it’s Yellen’s turn. America’s monetary leaders just don’t get it ... and they never will ... until it’s too late ... except next time capitalism implodes, taking American markets and the global economy into a big black hole, forever.
Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell.
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