Man, this guy is like the lady who lives next door to your off campus house and had the police on speed dial the second the stereo could be heard through the wall…
Just when it looks like we might really break out of this range, he has to come and beat the markets back into the place he is obviously comfortable with.
“You’re all doomed!” He says. Ok, actually he says that trade imbalances are bad and, since they are not going away unless american workers want to start getting paid minimum wage in yuans, that means we are all doomed!
My Grandfather turned very negative when he got older and Greenspan looks a lot worse than he did.
Statements:
- The only reason the dollar hasn’t crashed is that foreigners finance our debt (Duh).
- The strong dollar causes us to import a lot.
- But the foreigners can’t stop investing or else they’ll kill the goose that buys the golden eggs from them. (he is singlehandedly rocketing the price of gold as he speaks).
- We have a big debt, he says… (I guess you have to use baby talk so our elected officials can understand this stuff)
- Current Account Deficit is out of control at 6% of our GDP.
- The US is on a “Pernicious Drift” to “Fiscal Instability”
- We need to save more and spend less (does he get paid for this?)
Then he went all Adam Smith on us saying the “invisible hand” will be our friend if we let it. This coming from a man who constantly fiddles with the economy.
On the whole this is very doom and gloom of him, as usual, but it is nothing we don’t know, we just choose to ignore it. Actually, we are not ignoring it but the truth is that Intel doesn’t care if Americans, Asians or Europeans buy their chips. I think Greenspan’s view is very US-centric in a Global economy that is very different from his and my Grandfather’s days.
The economy thrives when banks lend money to businesses who put it to good use and end up employing people who ultimately become consumers of goods and services. Why does it matter if the banker is Chineese? Yes, we are losing jobs to overseas but we have already lost 50M jobs to computers and think of all those horseless carriage drivers who can’t make a living anymore…
I think we will adjust and find another way to fill the niche after, perhaps, a painful adjustment.
Expect the market to think about this for a while and then turn right up because, as Bill Murray so eloquantly put it “It just doesn’t matter!“
