Greenspan explains “real money”
Posted on 02. Okt, 2009 by Geert in het nieuwe kapitalisme
Greenspan explains that the gains because of the rally in equity markets are not paper gains, but real money (throught the balance sheet effect):
Since the bottoms in March, we have added nearly 15 trillion dollars worth in equity of listed companies around the world.
This is real money.
It is not paper money, becasue it raises as it did the levels of capital in financial institutions particu, but basically around the globe in all sorts of establishments.
…
The odds are that we flatten out… but I don’t look for an actual contraction1
By this reasoning, you can perfectly understand why
a) he was thé serial bubble blower
b) he always said that you can’t detect bubbles in advance
c) real money has been devaluing and paper money has been rising under his presidency
koen2
02. Okt, 2009
Greenspan, the clown, has played his role as Bubble Meister, at the time that the system was ready to blow bubbles (desinflation, etc.). It would have spit out any banker who wasn’t a Bubble Meister.
http://www.itulip.com/images/GREENSPAN20.png
And now, Bernanke will play his role as Inflationary Fighter of the Deflationary Demon, at the time that the system is ready to generate that Demon. Confer the reaction of Gold when he was elected.
carl
02. Okt, 2009
Work for the elimination of concrete evils rather than for the realisation of abstract goods;
Do not aim at establishing hapiness by political means.
Rather,aim at the elimination of poverty by direct means.
Sir Karl popper in “Conjectures and refutaions .Utopia and Violence”
blue-coat
02. Okt, 2009
Vroeger werden valsmunters levend gekookt. Nu zitten ze in de regering,
carl
03. Okt, 2009
Dear Mr Alan Greenspan,
Math doesn’t lie and cannot be spun,statistics can lie,but no simple math.
In Your beloved country,The USA the employment population rate fell to 58,9 procent;
The unemplyment for those Americans agesd between 16 to 19 year old skyrockterd in september 2009 to 25,5 percent.
The emplyment population for this age group is just 26 percent;with the participationrate falling off the cliff,from 40 percent to 35 percent.
The civilian labor force dropped by a 1,28 million in sep 09 from aug 09;with 235000 people being added to the work force.The participation rate plunged to 65 percent.
Jobs lost in the past 22 months totales 8039000,while the non-institutionalized civilian adult population (i.e.those not in prison,or in a mental hospital) has risen to 3166000.
This brings the ACTUAL jobs lost number to 11205000.
Now dividing 3166m bu 22 months roughly equals 144 .
This is the number of jobs that have to be created every MONTH in order to keep up with the growth population.;taken times 24 months this gives up 3456000 additional jobs that need to be created to keep up with population growth betwee now sep 09 and sep 2011 (24 months is two years).
Added together this means your country,the USA,,this means you need to have 14661000 (or an average of 661000 jobs) added to the economy by the above given figures to reach par with nov 2007.
Ther you go,Mr grenspan.
The V shaped recovery and green shoots simoultaneouslu detoned.
And in many sectors there is 10 to 20 to 30 percent overcapacity.
And the Chinese imported products are so cheap.
The truth behind the numbers ,Mr Greenspan,you don’t want to talk about it.
The “media” will not dig and also will not discuss -they are fooling themselves and the general under and unemplyed people.
The last time around it took 100 years fot the dollar to lose 92 percent of its purchasing power.But with Mr Bernanke at the Fed now,it won’t take another 100 years for the same to happen again.
You know,Mr Greenspan,that Mr bernanke in october 2005 was moved from the Board of Governors at the Fed under your presidentship,to become the Chairman of the White House Council of Economic Advisors (a decision taken in july/august 2005),bringing him “inside the White House for a while so that the President Bush could become comfortable with him before his appointment as the Chairman of the federal reserve Board was made”.Correct.
The president had to be absolutely sure that mr Bernanke was really serious abot the Fed’s power to PRINT MONEY and,in emergencies,to DROP dollar bills from a helicopter in order to finance this administration’s ill-fated military follies in Iraq and Afganistan and alarmingly rising DEBTS whihchare fuelling ASSET INFLATION and financing EXCESSIVE US consumtion.
So much for the Fed’independence,Mr Grrenspan.
Your successors are now preparing impoverishment four the people.Smart hedge Fund managers will all have sold their businesses and will have left the US to live in the Carribean,brazil,Singapore or Thailand,while members of the FED Reserve Board will either be in Jail or defending themselves from claas action suits in costly litigations in courts of law.
Your successor Mr Ben Bernanke will flee the US in a hurry,he won’t however,unlike JOHN LAW, even be able to afford to buy a shed with his billions of WORTHLESS dollars
Your Sinderaly
koen2
03. Okt, 2009
Greenspan was turned into a bubble clown by the system itself. Remember his “irrational exuberance” in 1996? And the reaction of the ’system’? After that, he adapted and gradually turned into a bubble clown. Just what the system wanted him to be.
BTW: as predicted: mostly new taxes (directly and via companies), more taxes on capital, and almost no savings/smaller government sector.
Long live the Belgian regime and its many Flemish ‘collaborators’.
http://www.standaard.be/Artikel/Detail.aspx?artikelId=DMF20091003_017
BRUSSEL De regering overweegt om de roerende voorheffing op de rente op kasbons, termijnrekeningen en spaarboekjes op te trekken van 15 naar 25 procent. Dat schrijft Het Laatste Nieuws zaterdag, op basis van een goede regeringsbron. Het optrekken van de roerende voorheffing kadert in de fiscale plannen waarmee de regering-Van Rompuy het gat in de begroting wil dichten.
Theo
03. Okt, 2009
I just love how the interviewer is looking at him…. Even he can’t believe what he’s hearing!!!
koen2
03. Okt, 2009
If you want to know what’s really going on, read this:
http://www.istockanalyst.com/article/viewarticle/articleid/3520700
Get ready because the second dip will occur. It will be nasty: unemployment will be higher and stocks will go lower than in 2009. I am convinced that it is politically unacceptable to have the government propping up the economy as Koo suggests it should. The question now is one of timing: when will the government stop propping up the economy? The more robust the recovery, the quicker the prop ends and the sooner we get a second leg down.
So to recap:
1. A depression was borne out of high levels of private sector debt made apparent by a financial crisis.
2. The effects of this depression have been lessened by economic stimulus and government support.
3. Government intervention led to a reduction in asset price declines, which led to stock market increases, which led to asset price stabilization and more asset price increases. This has led to a false sense that green shoots are leading to a sustainable recovery.
4. In reality, the problems of high debt levels in the private sector and an undercapitalized financial system are still lurking, waiting for the government to withdraw its economic support to become realized
5. Because large scale government deficit spending is politically impossible, expect a second economic dip within three to four years at the latest.
koen2
03. Okt, 2009
So, what does this mean for the American and global economy?
1. The private sector (particularly households) are overly indebted. The level of debt households now carry cannot be supported at the present levels of consumption. The natural tendency, therefore, is toward more saving and less spending in the private sector (although asset price appreciation can attenuate this through the Wealth Effect). That necessarily means the public sector must run a deficit or the import-export sector must run a surplus.
2. Most countries are in a state of economic weakness. That means consumption demand is constrained globally. There is no chance that the U.S. can export its way out of recession. That leaves the government as the sole way to pick up the slack.
3. Since state and local governments are constrained by falling tax revenue (see WSJ article) and the inability to print money, only the Federal Government can run large deficits.
4. Deficit spending on this scale is politically unacceptable and will come to an end as soon as the economy shows any signs of life (say 2 to 3% growth for one year). Therefore, at the first sign of economic strength, the Federal Government will raise taxes and/or cut spending. The result will be a deep recession with higher unemployment and lower stock prices.
5. Meanwhile, all countries which issue the vast majority of debt in their own currency (U.S, Eurozone, U.K., Switzerland, Japan) will inflate. They will print as much money as they can reasonably get away with. While the economy is in an upswing, this will create a false boom, predicated on asset price increases. This will be a huge bonus for hard assets like gold, platinum or silver. However, when the prop of government spending is taken away, the global economy will relapse into recession.
6. As a result there will be a Scylla and Charybdis of inflationary and deflationary forces, which will force the hands of central bankers in adding and withdrawing liquidity. Add in the likely volatility in government spending and taxation and you have the makings of a depression shaped like a series of W’s consisting of short and uneven business cycles. The secular force is the D-process and the deleveraging, so I expect deflation to be the resulting secular trend more than inflation.
7. Needless to say, this kind of volatility will induce a wave of populist sentiment, leading to an unpredictable and violent geopolitical climate and the likelihood of more muscular forms of government.
8. From an investing standpoint, consider this a secular bear market for stocks then. Play the rallies, but be cognizant that the secular trend for the time being is down. The Japanese example which we are now tracking is a best case scenario.
Nick Doms
03. Okt, 2009
@ Carl and/or all
Someone must have been really angry when posting a comment.
What exactly is the correlation between job losses in 2009 and Greenspan?
Where was everybody when i predicted the fall of the house of cards in 1993?
Who wrote about the solution to the so called “exuberance”?
Never mind. I always thought this was a blog where people exhange intelligent opinions instead of spitting angry venom without content or contribution.
I guess i was wrong.
Sincerely,
Nick Doms
03. Okt, 2009
i didn’t know that i was supposed to be able to read cyrillic to communicate on the website.
Something new and nothing surprises me anymore.
Just one question:
is anyone really “managing” this website or has it just become facebook2?
With all due respect to the owners and all members.
Herman
04. Okt, 2009
Waarom begint hier iedereen ineens in het Engels ? Staat dat chiquer misschien of denkt men dat Greenspan himselfs deze commentaar komt lezen ?
koen2
04. Okt, 2009
@ Nick Doms: it sounds like you’re trying to defend the Bubble Clown.:)
my own opinion is that we shouldn’t focus on persons but on the system in which they function, the system that steers their behaviour and even their thinking
in casu on our quite dysfunctional, historically grown (it hasn’t been designed ex nihilo) financial-economic system (even though it has huge merits, but it ain’t perfect, unfortunately, free market fundamentalists will never accept this)
but man has evolved to think about the world in terms of ‘persons’ or ‘beings’, not in terms of abstract ’systems’
for our neocortex has evolved to be able to live in bigger (and more coherent) groups:
http://www.sciencedaily.com/releases/2009/09/090930175731.htm
koen2
04. Okt, 2009
tja, aangezien er geen aparte topic over komt over dit heikel onderwerp, plaats ik het hier maar
op de tijd is het nieuws over de verhoging van de roerende voorheffing ingeslagen als een bom (meest gelezen artikel)
wat me opvalt bij de commentaren is dat weinigen blijken in te zien dat dit alles gebeurt om de gapende en nog steeds groeiende putten van een ander land/natie te vullen: Belgique
het is alsof we via de benelux Nederland zouden financieren, want ja, België is, objectief gezien, niet veel meer dan dat: een supranationale organisatie
het gaat de transfers nog doen toenemen (maar die nemen dus al jaren aan een stuk toe)
terwijl we nog steeds niet meer economische hefbomen in handen hebben
zoals ik al zei: leve het belgische regime en haar vele vlaamse ‘collaborateurs’; en o ja: leve het vlaamse ‘volk’ (lol)
http://www.tijd.be/nieuws/binnenland/VFB_hekelt_mogelijke_stijging_roerende_voorheffing.8240609-438.art
Voor al deze bijkomende belastingen was deze dag voor Belgie op 8 juni.Terwijl in Nederland,waarschijnlijk het sociale land ter wereld dit te samen met Duitsland was op 24 mei.De genomen maatregelen zorgen nu reeds dat Tax Freedom op 26 juni zal vallen.En we zijn pas begonnen.
carl
04. Okt, 2009
The derivatives market poses major “systemic ” risks in the international financial sector.
The derivatives market and the use of them by hedge funds and the like can create large,hidden exposures.
The B.I.S. in Basle says that the global market for derivatives rebounded to 426 trillion dollar in the 2nd quarter 2009.;as risk appetite returned,but the system remains unstable and prone to crises.
The 16 % rise of these derivatives is mostly due to a surge in futures and options contracts on thrre-months interest rates.
William White,the chief economist of the BIS,says that the danger is that regulators will AGAIN fail to see that big institutions have taken far more exposure than they can handle in schock conditions.
The BIS warns for inflatiuon.
Conclusion of the BIS
The economic recovery is an illusion.
The world will come to realize that the crisis we have gone through thus far,is merely the INTRODUCTORY chapter to the economic crisis as it will be written in history books.
See the figures of unemplyment in Europe and in USA,if that isn’t a crisis….
As Ghandi said :
Ther is no god higher than TRUTH
carl
04. Okt, 2009
een verhoging van 66 procent RV op de spaargelden is indien dat zou waar zijn een echte onteigening van de spaarder,die reeds zwaar is getroffen door de superlage spaarrente op de spaarboekjes die toch ongeveer de helft van het Belgische BNP uitmaken (175 miljard euro).
Van 15 naar 25 procent gaan is een zware straf voor de kleine spaarder.
REn dit nadat de kleine belegger in Fortis aandelen als zwaar gestraft is.
Het bankkartel houdt al jaren de kleine spaarder in de greep met lage tarieven die nu zelfs nog door de regering werden geplaffoneerd.
En beseffen dat de banken en hun beschermde kartels daar zeer goede marges op scoren.
Waarschijnlijk is deze voorgestelde verhoging van de roerende voorheeffing op spaargeld van 15 naar 25 % een zware kwakkel.
Wait and see
koen2
04. Okt, 2009
@carl: meest waarschijnlijk is het een manier om een verhoging tot, pakweg 20% erdoor te krijgen
eerste creëer je een schokeffect, 20 cent bij de dieselprijs bvb., vervolgens kom je af met 3 cent erbij of zo
iedereen opgelucht, en maatregel erdoor:)
nu laten ze dus eerst een proefballonetje op met ‘25%’ erop
maar vergis je niet: binnen x aantal jaren zitten we effectief aan 25%
koen2
04. Okt, 2009
van geerts twitter blog: “Alle ideeën om het gat in de begroting te dichten zijn weer nieuwe inkomsten. Is er echt niemand die ziet dat er ook bespaard kan worden ?”
hij doet precies alsof ie niet weet hoe de vork in de steel zit, ik vrees nochtans dat het maar al te duidelijk is: Vlamingen, zouden natuurlijk veel meer besparen, confer maatregelen van Vlaamse regering
Walen daarentegen (lees PS), willen vooral meer geld ophalen bij de ‘rijken’
dat dit de facto nog meer geld gaat versluizen naar Belgique, is mooi meegenomen natuurlijk
mij niet gelaten, iedereen is voor solidariteit nietwaar:)
al kun je je natuurlijk wel afvragen waarom we al zo lang (150 jaar) zoveel geld geven aan één land, één dat dan nog in het rijke hart van Europa en midden de befaamde ‘blauwe banaan’ ligt, en waarom we niet meer geld geven aan, pakweg, Ethiopië, hallo ’solidaire’ belgicisten?
maar er zouden wel meer economische hefbomen in vlaamse handen moeten tegenover staan
Nick Doms
04. Okt, 2009
@ Koen2
I do not defend anybody and i certainly do not call anybody a “clown”.
The current crisis started well before anybody paid attention or predicted it.
People can write about how flat the world is, how we tilt to the east, how the world is getting rounder, but what does that really do?
Nothing.
When i realistically write as a professional that the next bust will come from commodities, guess what the reaction was…you can read it on this blog.
Sincerely,
@ Theo
I am leaving this blog but would like to have an opportunity to stay in touch with you professionally.
You can reach me at ndoms@gppllc.us (you can verify my email through Geert who has it on file).
All the best.
Theo
04. Okt, 2009
@ Nick Doms
Please don’t abandon the blog because of a few comments… who cares! everybody has a day off the wrong side of whatever.
That Russian post was meant for me I think. Somebody’s idea of joke I assume as it wasn’t very smart. The guy called himself SNOB and did a self portrait.
I would love to stay in touch with you. Thank you for the email. We’ll have to find a way to get to the Capitol at sunrise!!!
Regards
Theo
Herman
04. Okt, 2009
Als proefballon kan het tellen (de verhoging van de RV).
Eigenlijk zegt de regering : (’stop met sparen’, geef alles uit en we zien wel over een jaar of 30′
Belgie IS failliet maar niemand wil het zien, de government bonds worden nog vlot verkocht , tot wanneer die bubble springt en dan zullen we het einde der tijden meemaken vrees ik (zimbabwe anyone ???)
koen2
05. Okt, 2009
@Nick Doms
ok, I will call him bubble homunculus from now on (more respectfull:))
http://www.itulip.com/GREENSPAN.jpg
I’m not certain though, that it is that which bothers you,
anyway: good luck
Emeline
05. Okt, 2009
@Nick Doms
Ik vind het echt jammer dat je de blog verlaat.
Ik las graag je interessante comments en waardeerde je fijne stijl.
Good luck
carl
05. Okt, 2009
Ik vind het zeer jammer dat Nick Doms deze site verlaat.
Ik hoop dat hij verder meecommentarieert.Zijn meningen laten een open debat toe.Elke wetenschappelijk theorie is immers weerlegbaar.
Elk besluit is voorlopig.Forum kritiek ook en vooral in deze site is essentieel en onmisbaar.Anders worden we een kudde.
Er bestaan geen eens en voor goed waarheden.
Sir Karl Popper in The open society and its enemies.
carl
05. Okt, 2009
@ Nick Doms Benjamin S. Bernanke the Chairman of the Federal Reserve argued in 2000 that ” the economic repercussions of a stock market crash depends less on the severity of the crash itself than on the response of economic policymakers,particularly central bankers.
The federal reserve he said,had been wrong in trying to protect teh value of the dollar.
Etc etc…
Geert
05. Okt, 2009
@Nick Doms: ik hoop dat je op de Econoshock-blog blijft posten. Je bijdragen worden geapprecieerd.
Emeline
05. Okt, 2009
@Nick Doms
Ik denk dat vele bloggers hopen dat je terugkeert naar de Econoshock-blog.
Ook ik sluit mij aan bij de groep die je probeert terug over de streep te trekken.
Ik schreef wel: “good luck”, maar eigenlijk bedoelde ik eerder “come back”.
koen2
09. Okt, 2009
http://news.bbc.co.uk/2/hi/business/8298182.stm
The US economist widely credited with having predicted the financial crisis has warned we are already “planting the seeds of the next crisis”.
Nouriel Roubini told the BBC that he is concerned about the growing gap between the “bubbly and frothy” stock markets and the real economy.
Over the last six months, the Dow Jones Industrial Average has risen about 45%.
But Mr Roubini says he sees an economy where consumers are “shopped out” and “debt burdened”.