Greenspan Changes His Position on Danger of Budget Shortfalls

[Chicago Democrat]

Greenspan Changes His Position on Danger of Budget Shortfalls
By EDMUND L. ANDREWS

Published: March 16, 2004


(snip)

In speeches and testimony, Mr. Greenspan, chairman of the Federal Reserve Board, is piecing together a theory about debt that departs from traditional views and even from fears he has himself expressed in the past.

(snip)

On Monday, the nonpartisan Congressional Budget Office published new calculations showing that the budget deficit now stems almost entirely from tax cuts and spending increases rather than from lingering effects of the economic slowdown.

Mr. Greenspan's thesis, which is not accepted by all traditional economists, is that increases in personal wealth and the growing sophistication of financial markets have allowed Americans — individually and as a nation — to borrow much more today than might have seemed manageable 20 years ago.

This view is good news for Presi dent Bush's re-election prospects. It increases the likelihood that the Federal Reserve will keep short-term interest rates low. And it could defuse Democratic criticism that the White House has added greatly to the nation's record indebtedness.

http://www.nytimes.com/2004/03/16/business/16FED.html?hp

[kalian]

1. OMFG.....

this has to be a joke. Please, somebody tell me that this is a joke.
Did they threaten his family or something? Did this guy lose it?

:wow:

[punpirate]

5. Greenspin lost it a long time ago....

Everything he's said and done has the intent to stabilize the markets, rather than to stabilize monetary policy and the general economy.

He's been on the dark side for a long, long time....

Cheers.

[Chicago Democrat]

11. Greenspan is evil .. it makes me sad.

"I will crush their insignificant rebellion."

[keithyboy]

21. Could this be any more transparent?

Greenspan is doing everything he knows how to do to save BUSH!! Not to save our economy or the economy of our children and grandchildren...but to save BUSH.

[NJCher]

2. oh please

who came up with distorted little gem?


Cher

[proud patriot]

3. Honestly I think he is trying desperately not to panic the market

Biding his time til Nov...

[kalian]

4. Something is definitely going on behind the scenes....

this is a MAJOR issue if Greenspan is backpedaling like this.
His whole arguement goes against traditional economic theory. What
he is stating is that Americans are economically invulnerable
and that debt is "insignificant". Literally...

:wow:

[Chicago Democrat]

13. And so the Enron Accountants Finally Embrace the Charade, as

we all have gone far to far down the dark path into the evil forest.

[dusty64]

32. I sense desperation,

fear of complete economic collapse perhaps. He DOES seem to be bending over backwards a lost his last shred of credibility propping up our regime.

[demgrrrll]

8. Someone wrote that they may have his wife over a barrel with the

Plame incident and he is reading the script to keep her out of trouble. Maybe, or maybe he has just completely gone round the bend.
Hard to tell.

[RC]

6. Duh!

"On Monday, the nonpartisan Congressional Budget Office published new calculations showing that the budget deficit now stems almost entirely from tax cuts and spending increases rather than from lingering effects of the economic slowdown."

This is how economics works for you & I. So why is it so hard to understand this working for a government also?

[dax]

24. He agrees with us-cancel the tax cuts and we can afford a little spending

like on health care, education and building infra structure which creates jobs. We could actually quit invading other countries and have enough money to send everybody to college for those new promising high skill jobs that are left, we could go to single payer health care and put some insurance companies out of business but reduce 10% or more of what we spend and provide health care to everyone (reducing the cost of disability, lost productivity and DEATH for the millions who don't have it now-not to mention all those deformed babies the right to lifers pretend to care about who could lead productive lives with early intervention and better prenatal health care=more research and their disabilities could be PREVENTED. I think he isw on the right track- cancel the tax cuts and the deficit problem can be solved when we limit spending to the necessities of life instead of Haliburton. With alternative energy development we could pull completely out of the Middle EAst and let them have their oil. I really like this idea-just the facts we need to interpret just alittle different-like save lives, or buy a new yacht move more money offshore where you can hide it.You choose!

[Career Prole]

7. Greenspan! Cut it the hell out, will ya?!

Jerk. You've got one foot in the grave and the other foot on a banana peel. You're too old to sell out. You can't take it with you, you know.
Most of it's flammable. :evilgrin:

[rfkrocks]

9. Alan its time for your Bingo game at the home!

You know if what he said is a good economic theory how about the government can even borrow more to pay off the social security it owes the baby boomers and their children

[Lindsay]

10. Another fine spokesman

from the House of Waffles.

[whistle]

12. Yes, I think GreenSPAM is loosing it...

...or else he OD'ed on a cocktail (excuse the pun) of Viagra, Levetra and Cielas this past week. Al sees the handwriting on the wall. BushCo is about to topple this economy and he is repositioning himself, because he knows that his job could be exported to India before the end of the year. Bye bye Al
:hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi::hi: :hi:

[Chicago Democrat]

14. I hope his dick curls up and falls off!

Ooops it already has!

:hi:

[Ksec]

15. So does this mean I can max all my cards and not pay?

woohoo ! Im gonna be irresponsible and not give a flyin fuk !

[kalian]

16. That's essentially what this moron is saying....

:eyes:

Incredible...just incredible.

[Sticky]

17. I can not wait

to hear what Paul Krugman has to say about this. then Lou Dobbs and his economist friends.
Greenspan just sold out America.

[necso]

18. Greenscam is/was just a partisan hack.

When Clinton was in office Greenscam was too slow to lower interest rates (which would have saved on debt costs at least) and preached a "Good for Democrats only" brand of fiscal responsibility. When further interest rates cuts were needed because of the economic slowdown at the end of Clinton's 2nd term, Greenscam did nothing as his part in giving us *.

So * gets in office and Greenscam makes rate cuts like a crack whore lowering her prices when she needs a fix. And now when a rate hike is long overdue, he just spins some new BS.

Everyone knows interest rates are not going up (at least substantially) until after the election. Spin it as he might, this is pure and simple partisan politics.

(I apologize to crack whores for the implied insult.)

[Vitruvius]

34. Actually, Greenspan was HIKING interest rates in 2000 -- to defeat Gore.

Hiking interest rates in the absence of inflation. The Clinton boom was ended by this nasty little partisan stunt -- tho' Greenspan's timing was off; the recession did not actually begin until March 2001 -- under Bu$h.

And one reason the recession has been so bad was that Greenspan was was desperately hiking interest rates beyond reason to try & get the recession going BEFORE election day. All in an attempt to elect Bu$h. Greenspan failed; the Rethug Supreme Court had to do the job for him. Then the Rethug-Greenspan recession hit with a vengance in March 2001.

Of course, Bu$h has been blaming Clinton for the recession ever since.

Similarly, the stock market began to soften as Greenspan hiked interest rates try to elect Bu$h, but the real downhill trend began as soon as the Supreme Court selected Bu$h -- a lot of investors, including myself, dumped part of their holdings because they were afraid Bu$h would do the same damage to the US economy as he did to the Texas economy. And he did.

Partisan hacks like Greenspan and drunken cokeheads like Bu$h are unfit to run an economy -- or a country.

[roscoeroscoe]

38. source, please! source please :)

this is heavy.

[KAZ]

42. Try this.

http://www.businessweek.com/bwdaily/dnflash/july2000/nf00725g.htm

[wabeewoman]

39. Not just that

but I remember as soon as bush got into office he started dissing the economy, saying it wasn't good -a bunch of similar statements which at the time made me think they wanted to economy to become poor.

[necso]

43. I remember

seeing rate cuts as being necessary policy, (though not as being Greenscam policy) and not getting them ... I had forgotten the part about rate increases. Even in 2000, I had felt for a long time that Greenscam's policies were transparently ideological, partisan, political and incompetent and so his actions did not surprise me. Now and then the mere mention of his name in respectful tones makes my blood boil.

I saw a quote from him in 2000, where he was asked about not lowering interest rates, which was clearly the responsible policy and he said something to the effect that: "He didn't want to interfere with the election." (I wish I had saved the reference and the source, but I didn't so I did not use this in my original post.)

(I guess he "doesn't want to interfere with this election" either.)

This man has consistently misused an office of the highest trust for the basest personal, ideological and political purposes. It is long past time that we exposed him and all these other frauds in the harshest possible terms. Economists of the Greenscam sort are the fiscal equivalent of the neocons, their pitiful ideological fixations, disastrous policies and their consistent refusal to let any feedback (ie reality) sway their course are beneath contempt.

Thank you for your valuable addition.

[wuushew]

19. How long is his chairmanship good for?

I think he was reappointed in 2000, so barring a multiple term Democratic dynasty the miracle of Bushnomics could be with us for a long long time.

[Yavin4]

20. When Finance Ministers Start Saying, "Debt Doesn't Matter"

A huge economic collapse is on the way. This is what Finance Ministers in Third World nations say right before their currencies crumble.

Greenspan has been Bush's whore since 1999.

[keithyboy]

22. Charge to the max and declare bankruptcy....

That's what Greenspan is saying to our children.

[salin]

31. While his buddies try to draconianly change bankruptcy laws

will they create a new industry (jobs).... set up modern day debtor's prisons for the public that follows Greenspan's role modeling?

[shanti]

23. stop, you're scaring me

:scared:

[daleo]

27. Reminiscent of the South Sea Bubble, etc.

"Extra-Ordinary Popular Delusions and the Madness of Crowds" - great book, well worth reading.

[RUMMYisFROSTED]

35. Here's a link.

http://www.litrix.com/madraven/madne001.htm#1

[cliss]

25. I agree with everyone who's posted here

this stuff is scary as hell. Worse than a horror movie. Forget terrorism. What WE are doing to ourselves, as a country, is far more dangerous and damaging than some outside threat could ever be.

All I could think of, as I was making my way down the posts was, our Founding Fathers, who were experienced in human nature (meaning, they knew what people are capable of), and they set up our government in fragments, or separate entities, so just this sort of thing could never happen.

The Federal Reserve is an independent entity, which answers to no one. Not even the President. Supposedly. But it appears that even the founding fathers could not have imagined the mischief that their heirs were capable of.

So it looks like the Chairman of the Federal Reserve has been bought and paid for.

If i were one of the Founding Fathers, I would be cringing right now. Either that, or thinking about murder. It's a good thing they lived 250 years ago.

[TacticalPeek]

26. Irrational exuberance.

:shrug:

[Mountainman]

28. tax cuts good, make them permanent, cut social security benefits

raise social security taxes, increasing government debt is OK.
He surely has gone over to the dark side. Will someone please let us in on the background of this?

[radfringe]

29. if you don't like the way you cook the books

then change the "recipe"

[xchrom]

30. what a loon

[ithacan]

33. Greenspan needs to go.

Dean was right. Greenspan is proving to be nothing but a whore for the republicans and corporations.

He needs to be booted asap.

[Jacobin]

36. Alzheimers? Mad Cow Disease?

Certainly there must be an organic diagnosis for someone with his experience in economic theory to simply throw all economic reason out the window and proclaim that "deficits don't matter"

As I understand it, he is saying that we have gotten so good at borrowing money on a governmental, corporate and personal level, that we can borrow money ad infinitum and never worry about the economic impact of infinite debt burdens.

Someone please call the men in the little white coats. Quick!

[Hotler]

37. Allen, Allen, Allen,

you can be the smartest guy in the world, but turn around and suck dick just once, and people will only remember you as a cock sucker.

[ProfessorGAC]

40. Greenspan Has Completely Lost His Mind

Another case of someone who doesn't understand the disconnect between microeconomic finance and macroeconomic reality.

He is out to lunch on this one. Business can leverage with debt because it expands their output without diluting ownership and control. The gov't can't do that. Spending more money does not increase the output of gov't in any way. It doesn't add to productivity of gov't itself and thus just increases GDP by increases in GS.

Finally, from a macroeconomic perspective, more spending and more debt are the same thing. Even maintaining spending while cutting revenues results in the same thing. It doesn't mean gov't output or efficiency improves. It just means more debt!

This basic principle of business finance does not apply to macroeconomics and it's shocking that the head of the Fed doesn't know this.
The Professor

[Cocoa]

41. signing on to the Cheney Theory of Deficits

the great economist Dick Cheney, "deficits don't matter."