GREENSPAN ON TRUTH SERUM? [View All]

Greenspan on Truth Serum?

Greenspan must have been very confused today. He mistakenly leaked out some truth about the economy (Did someone slip drugs into his coffee?)

Of course, he started out by interjecting his right-wing mythology into the discussion, by mentioning the alleged threat of "protectionism." (Heaven forbid we should impede Corporate America from shopping globally for the cheapest labor.)


However, in a surprising turn today, he almost admitted there were some weaknesses. Of course, he referred to them as "imbalances." Maybe he was referring to the imbalance between consumer spending and consumer income. Or the imbalance between productivity and hourly wages. Or the imbalance between goods supply and wage-supported consumer demand.

On second thought, it couldn't have been any of those imbalances, could it?. Because everyone knows that insufficient consumer demand is impossible, don't they? Regardless of income, consumers can always buy more production, can't they?

What was really surprising were his statements about the "paper wealth" created by housing appreciation. He actually warned people that they shouldn't count on that paper wealth, which could evaporate if economic conditions deteriorate rapidly. I don't have his exact statement, but for Greenspan to acknowledge that some of our recent wealth creation is "paper wealth" is truly noteworthy.

Today Greenspan strengthened his warnings about the housing market. He stopped short of calling it a "bubble," but he clearly warned of the dangers of declining home prices, as well as the effect it would have on our economy. He did admit that in some local housing markets homeowners and lenders could get clobbered. In previous speeches Greenspan has warned of "froth" and "speculative fervor."

Here's the link to the AP article:
http://news.yahoo.com/s/ap/20050826/ap_on_bi_ge/greenspan;_ylt=Ai6pY.EFL5MIZ5.er9YM2gSs0NUE;_ylu=X3oDMTA3b2NibDltBHNlYwM3MTY-

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