Zeev's Turnips Patch-No Politics (ZEEV)

[market_watcher]

Well, Lee, consider that Greenspan says he couldn't have prevented the late 90's equity bubble merely by foresight, using the 20's bubble as a cautionary model, yet he claims that he can prevent deflation by using the lessons of the 30's and Japan as a cautionary model. Where is the proof that central banks are any more capable at the back-end of a bubble than the front-end? Why couldn't the 20's have been used as a model to prevent the equity bubble of the 90's? Presumably, the Fed should have spent as much time trying to learn from the mistakes that caused that bubble as they spent trying to learn from the mistakes they made after that bubble burst, no? If he can't cite evidence why the Fed will be better at dealing with the bubble aftermath than it was in preventing the bubble in the first place, that's a form of dishonesty, in my book.

Then, his claims about the housing market being healthy are also dishonest. We don't know what is going on in the housing market because the two largest mortgage underwriters are cooking their books. One has already started to come clean and I would bet dollars to doughnuts that the other will start to come clean soon as well. Greenspan is, therefore, being dishonest when he says that housing is not in a bubble.

These are my main gripes and really all I have to say on the topic. Perhaps your opinion is based on other factors you think are more important or you disagree with my own assessment of these factors. I think Greenspan has the intellect to be intellectually honest, but he does not have the will to do so. I could speculate about exact motives, but I think they are generally in the realm of his political aim to remain in the seat of power at the Fed.