Okay, talk about frustrating moments. I had created a well-thought out post on the Congressional Joint Economic Committee and a recent editorial from Alan Greenspan. Without warning, it was erased. I thought WordPress would help eliminate my editing frustrations not actually eliminate my posts.
Regardless, I move forward…
This is very interesting.
In short, Connecticut, like the rest of the U.S., has, on the whole, been adversely affected by Bush’s economic doctrine.
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From Greenspan, a renowned objectivist, we learn that the recent uncertainty associated with the economy was inevitable - it is simply coincidence that the busting of the housing bubble prompted it.
The crisis was thus an accident waiting to happen. If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market. As I have noted elsewhere, history has not dealt kindly with protracted periods of low risk premiums.
The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when the economic ruin of the Soviet Bloc was exposed with the fall of the Berlin Wall. Following these world-shaking events, market capitalism quietly, but rapidly, displaced much of the discredited central planning that was so prevalent in the Third World.
Moreover, Greenspan blames competitive, low-priced exports from the developing world, the fall in global interest rates, and increased global saving rate and lower equity premiums and real estate capitalization as the precursors that set the stage.
He also imparts a bit of economic wisdom:
After more than a half-century observing numerous price bubbles evolve and deflate, I have reluctantly concluded that bubbles cannot be safely defused by monetary policy or other policy initiatives before the speculative fever breaks on its own.
Translation: the market will address all things in due time. Being a follower of Keynesian theory and primarily a logical positivist, I still can’t seem to accept Greenspan’s argument, but it’s awfully difficult to disagree with a man of his caliber.
