Art, architecture, history, travel

Greenspan’s Mistakes:It’s not the end of the World, Yet

Greenspan’s Mistakes

First let’s make one thing perfectly clear this is a financial PANIC it is not a replay of 1929. 1929 saw 30% unemployment. 1929 saw the government increase taxes during a recession. 1929 saw the government take 3-4 years before taking any action. Information exchange was much slower in 1929. Telephone, telegraph and radio were the primary means of exchange of information. Television much less the internet was unheard of. The government was less powerful to expand the money supply. The world and the United States were on the gold standard. For better or worse you can’t go out and print more GOLD; you have to buy, mine, smelt, refine or otherwise process it. As a currency it is much less elastic than credit. The currency of the United States is based on trust that the US government will one way or another honor its debts.

We may have squandered the greatest economic and  financial opportunity of all time, when the United States dominated the World economy with innovation, productivity and know how.  We let go of the world’s greatest manufacturing base and for What?

As the wise king Solomon once said and repeated by Abraham Lincoln, This too shall pass.

  • We are suffering from a loss of confidence.
  • The separation of investment and commercial banking should never have been eliminated.
  • Tax cuts, a balanced budget, reduced government spending all of these need to be addressed properly.
  • Adjustable rate mortgages (ARM) AT LOWEST Interest rate in 40years 2 1/2% people should have gone for a 30 year fixed rate not signed up for an interest rate that was guaranteed to go up.
  • Long Term structural problems in the economy need to be worked out every 20 years or so. Panics in 1837, 1857, 1873, 1897, 1907, 1929, 1974.
  • Assuming everyone is honest and will always do the right thing is foolish. There are always those who will do whatever they think they can get away with when no one is watching.
  • Technology and the internet. We don’t need those big brokerage houses anymore and their research. The exchange of information is instantaneous.
  • Leverage—you want it but you should put money into the economy when it is going up not when it is going down for a better effect.

3 responses

  1. The market is now down almost 70% from its all time high of 14,000. How long will it take for it to get back up there? 10 Years? 20, 30?

    April 19, 2009 at 5:54 pm

  2. Don’t despair it’s more like the 1970’s than the 1930’s. The market poked above 1000 went down and seemed to take forever to get back there again. I remember I was in college then.

    The two biggest problems in the Depression were unemployment and deflation. As people were laid off they had no money to spend, causing prices to fall. Causing MANUFACTURERS to make more layoffs, causing prices to fall, more lay offs; all in a vicious seeming unending cycle.

    April 19, 2009 at 7:39 pm

  3. Point #5.

    Look at those bankers, AIG ,the TARP money, and those bonuses. Congress should have said what they were supposed to do with that money. If you give people money without imposing any restrictions, What did they think the where going to do with it>

    May 11, 2009 at 8:58 pm

Comments are always welcome!

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s