The recent publication of a book by Alan Greenspan has quite naturally gotten quite a bit of publicity, and for those of us who are of Scots heritage like myself, here's an interview where he gets to the crux of the matter; that the Fed really is powerless to do that much to intervene when a bubble, such as the subprime mortgage disasters currently playing out, bursts.
What troubles, or confuses, me is that he stated at least once that he didn't see the subprime bubble bursting until last year.
Really? We have people taking out ARMs with a debt repayment/income ratio of 0.35, and he doesn't see trouble on the horizon? He didn't think it worrisome that large portions of people were so clearly living beyond their means?
He's issued a clarification, but he makes one thing very clear; the idea that the Fed can navigate the economy around every shoal in the economic waters is simply untenable. When the Fed creates a bubble by lowering interest rates, that bubble will eventually burst, and there isn't anything the Fed can do to prevent it from doing so.
Actual news in New Brighton - We'll return to the Neighbors series tomorrow, as we actually have news to report in our fair city, and the topic is chicken farming: The New Brighton City...
58 minutes ago