Alan Greenspan vs. Ben Bernanke: the follies of Fed chairmen(Read article summary)
Both Greenspan and Bernanke have been flawed as Fed chairmen.
J. Scott Applewhite/AP Photo
Poor olâ AlanâŚ
We almost felt sorry for himâŚ
âMaestro mauledâŚâ said the headline in The Financial Times. We wanted to maul him many times. But now that others were doing itâŚit made us feel sympathetic to the old scalawag.
Mr. Greenspan defended his legacy. He was right 70% of the time, he said. The other 30% of the time he was wrong.
Hey, thatâs not bad. Pity itâs not true. Greenspan was wrong 90% of the time â at least.
He thought those fancy derivatives actually spread the risk of failureâŚand made the system more stable.
He thought those subprime loans helped people of modest incomes realize the goal of home ownership.
He saw no risk in keeping the key rate at an âemergencyâ low levelâŚyears after the emergency had passed.
But he hit one of those magic moments last weekâŚwhen he was finally right about something. He declared that the yield on the 10-year note was âthe canary in the coal mine.â This week, the canary wobbledâŚbut stayed on his feet. Heâs still standingâŚbut looking a little peaked.
While the former Fed chief was in the spotlight at The Financial Times yesterday, the present Fed chief was front-page news over at The Washington Post. Alan Greenspan is a scoundrel, no doubt about that. But he was, in some ways, a better Fed chief than Bernanke.
The trouble with Bernanke is that he doesnât know his limitations. He actually believes the Fed can look at the possible outcomes going forward and improve them before they come out.
âFed chief sounds a deficit warning,â is the headline. He said Americans faced a âdifficult choice.â Itâs between higher taxes and fewer entitlement services, he said.
This doesnât seem like a difficult choice to us. Weâd gladly accept fewer âservicesâ from the feds if theyâd lay off on the taxes. But thatâs because weâre in the half of the US households that actually pays taxes.
No kidding; the report was in yesterdayâs news:
âAlmost one half of US households pay no federal income tax.â
So, welcome to the beginning of the end. If half the citizens get bread and circuses without paying for them, you can bet that the whole shebang is headed for destruction. The math doesnât work. Half the people have no interest in curbing taxes or spending. Obviously, those people would prefer to raise taxes â on us â rather than give up their free pills and retirement benefits. Even among the half that does pay taxes, most pay very little â less than they get back in âservices.â
Meanwhile, the ârichâ get socked hard. According to the reports weâre seeing on scurrilous blogs and from our usually unreliable sources, the tax burden on the rich is set to rise over 60% of income â thanks to the health care charges they will have to bear.
By the wayâŚthe whole thing is a fraud. The services, that isâŚ
So thenâŚin comes the Fed againâŚand the US governmentâŚwearing white hats and pretending to save the situation. How? By bringing more of the economy under their control!
As far as we can tell, the last successful government program was WWII. And that was only successful because the competitorsâ programs were also run by government. But that doesnât stop themâŚ
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