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JW wrote:
> After reading the thread last week on AG (and the repost below
> originally by William Fleckenstein), I'm flabbergasted that anyone could
> say that AG really knows what he is doing and has respect for his
> decisions. AG has simply taken advantage of being in the right place at
> the right time. His attempt to single-handedly "manage" a soft-landing
> for the economy will instead likely result in a severe recession or even
> depression. What will people think then when unemployment is in double
> digits? Will we still want to build an AG statue? Let's not abolish
> facts along with the business cycle...
>
> >> Al's less-than-perfect predictions... Rather than try to refute point
> by point all of the claims that he made, I thought it might be more
> instructive to illuminate for readers the fact that poor Alan Greenspan
> has been no better and in fact quite a bit worse than many other
> prognosticators over the past 20-25 years. Let me first say that we all
> make mistakes, being human, and the future is never quite as clear as
> the past. But having said that, I think it's important for folks to know
> that Greenspan has missed many inflection points. This is especially
> important since so many people have placed their faith - not to mention
> their net worth and a good deal of borrowed money - on the fact that a)
> he's going to pick the right interest rate to make everything work just
> spectacularly and b) he's going to know exactly what to do when we have
> a problem in the stock market. <<
>
> JW,
Hey, give Al a break. He was trained to be an economist. He is supposed
to be wrong!
Why complain? Tthere is no market indicator that is more accurate than a good
reverse barometer.
Fading Alan maybe a good meal ticket. Count your blessings and send AG a nice
note telling him what a great job he is doing so he will keep "the indicator"
working well.
Perversely,
Norman
>
>
> -----Original Message-----
> From: listmanager@xxxxxxxxxxxxxxx [mailto:listmanager@xxxxxxxxxxxxxxx]On
> Behalf Of James Taylor
> Sent: Tuesday, March 07, 2000 8:01 PM
> To: realtraders@xxxxxxxxxxxxxxx
> Subject: [RT] Alan Greenscam, Public ENEMY Number ONE
>
> March 7, 2000
> Alan Greenspan: friend or foe?
> Author, William Fleckenstein
>
> Alan Greenspan outdid himself in his speech Monday in Boston. He
> entitled it, "The Revolution in Information Technology," although I call
> it "An Ode to Technology." Quite frankly, in my opinion, it completely
> embraced the new era and what wonderful things technology could do for
> us. I found myself disagreeing with many different points that he made,
> and agreeing with very few, other than the obvious that technology is
> wonderful and it's made our lives better.
>
> In my opinion, in his speech Greenspan has confused technology with the
> bubble, the very same bubble that he has created. He has in essence been
> reading the stock prices and doesn't realize what he has wrought. In a
> Rap I wrote in early January, I had a piece about Alan Greenspan
> inventing the Internet. I noted that since the fall of 1998 he printed
> copious amounts of money, and then last year when he should have been
> tightening, he panicked and printed even more money because of Y2K
> concerns.
>
> This fomented a bubble and money naturally flowed to the stocks with the
> most imagination. That centered on the Internet and other
> Internet-oriented ideas, as there was a lot of imagination potential and
> few facts. Those stocks did the best and the leaders of those companies
> were deemed to be visionaries, and whatever they proclaimed was
> therefore to be the future. What Greenspan has basically done is believe
> the action on the tape and the proclamations by the companies, and has
> decided that the Internet and technology have truly revolutionized
> everything in the most unique way.
>
> The flaw in this analysis is that technology has been revolutionizing
> the world for a very long time, and that does not allow one to pay
> absolutely stupendous prices to sales ratios, price-to-earnings ratios,
> etc. The Fed has fomented a bubble, and now the Fed has used the results
> of that bubble to justify the fact that things are more or less on
> course.
>
> Al's less-than-perfect predictions... Rather than try to refute point by
> point all of the claims that he made, I thought it might be more
> instructive to illuminate for readers the fact that poor Alan Greenspan
> has been no better and in fact quite a bit worse than many other
> prognosticators over the past 20-25 years. Let me first say that we all
> make mistakes, being human, and the future is never quite as clear as
> the past. But having said that, I think it's important for folks to know
> that Greenspan has missed many inflection points. This is especially
> important since so many people have placed their faith - not to mention
> their net worth and a good deal of borrowed money - on the fact that a)
> he's going to pick the right interest rate to make everything work just
> spectacularly and b) he's going to know exactly what to do when we have
> a problem in the stock market.
>
> So the question really is, should folks let everything ride on his
> ability to divine the future and to always do the right thing? Does his
> track record suggest that he is the man to bet on and is he the national
> treasure that so many congressman have said that he is? I say no. His
> record is littered with absolutely terrible calls at different
> inflection points, so I'd like to reprise a few of his past predictions
> and even some of his revisionist history of his past calls.
>
> My purpose is not to be mean or vindictive. I'm sure that folks could
> have fun with some of the things that I've said in the past. However, I
> am not the Fed chairman, nor do I believe that I know the future and
> know how to control the outcome of things as well as the Fed appears to
> think it does. Furthermore, folks do not believe that I can, which is
> not the case with Greenspan.
>
> On the 1973 recession... I'd like to start off with a quote from Jan. 7,
> 1973. "It is very rare that you can be unqualifiedly bullish as you can
> be now," Greenspan commented to the New York Times when he was president
> of Townsend Greenspan. That was two days after the 1973 stock market
> peak, when the market was on its way to declining 50 percent over two
> years, and we endured the worst recession since the Great Depression.
>
> On the S&L industry... The last thing that Alan Greenspan did before he
> left Townsend Greenspan to become Fed Chairman, was to opine on the S&L
> industry, and more precisely Charlie Keating's S&L. What follows is a
> vignette from the book "Inside Job," written by Steven Pizzo, about an
> encounter in 1984 between Greenspan and Ed Gray, who was the Federal
> Home Loan Bank board chairman.
>
> "Gray received a letter from respected economist Alan Greenspan telling
> him he should stop worrying so much. Greenspan wrote that deregulation
> was working just as planned, and he named 17 thrifts that had reported
> record profits and were prospering under the new rules. Greenspan wrote
> the letter while he was a paid consultant for Lincoln Savings & Loan of
> Irvine, CA, owned by a Charles Keating, Jr., company. Four years after
> Greenspan wrote the letter to Gray, 15 of the 17 thrifts he'd cited
> would be out of business and would cost the FSLIC $3 billion in losses."
>
> In addition, in 1985, Greenspan pronounced specifically that the
> management of the Keating thrift enterprise was "seasoned and expert"
> with a "record of outstanding success in making sound and profitable
> direct investments." For that quote I'm indebted to Jim Grant's terrific
> book, "The Trouble with Prosperity," which we will quote from again
> later.
>
> So those quotes provide a peek into the thinking of Alan Greenspan while
> he was still in the private sector. By the time the 1990 economic
> downturn rolled around, largely as a result of unsound banking practices
> and most especially the S&Ls, he was the Fed chairman. And I think it is
> most instructive to look at what he thought as we entered that recession
> and what he later claims to have thought about that.
>
> On the 1990 recession... For that bit of insight, I would like to quote
> extensively from Jim Grant's book, because he did a superb job of
> capturing what Greenspan said at the time and his later recollection of
> what he said.
>
> His 1994 version... "In testimony before the Senate Banking Committee in
> May 1994, Alan Greenspan all but claimed that the Fed had acted alone.
> `In the spring of 1989,' Greenspan led off, `we began to ease monetary
> conditions as we observed the consequence of balance-sheet strains
> resulting from increased debt. Households and businesses became much
> more reluctant to borrow and spend, and lenders to extend credit - a
> phenomenon often referred to as the `credit crunch.' In an endeavor to
> defuse these financial strains, we moved short-term rates lower in a
> long series of steps through the summer of 1992, and we held them at
> unusually low levels through the end of 1993 - both absolutely, and,
> importantly, relative to inflation. These actions, together with those
> to reduce budget deficits, facilitated a significant decline in
> long-term rates as well.'
>
> "Students of the Greenspan record, listening to the chairman claim
> credit for the restoration of American solvency, were left to wonder
> what they had missed. Interest rates had fallen, of course, and the
> broken financial economy had knitted. However, it was the first they had
> heard of this commendable and forehanded course of action by the Federal
> Reserve.
>
> "It was not until October 1991 that the phrase `economic headwinds'
> entered the Greenspan repertory. He used the metaphor to describe the
> unprosperous gusts that were buffeting the aircraft GNP, the source of
> which he identified as the debt predicament. However, it was a historic
> observation rather than a predictive one. Bank stocks had reached low
> ebb fully one year before Greenspan favored a Rhode Island audience with
> this apercu; the stock market-assisted recapitalization of the banking
> system was already long under way. In the midst of the overbuilding of
> real estate and the overleveraging of corporate balance sheets in
> 1988-90, Greenspan had been inclined not to dwell on the issue of
> credit, possibly because it had not yet, to him, become an issue. In
> remarks titled `Innovation and Regulation of Banks in the 1990s' before
> the American Bankers Association in October 1988, for example, he did
> not mention the excessive lending against real estate that was being
> carried out by members of his audience even as he spoke to them, and
> that would be featured as one of the great regulatory issues in the
> decade under examination.
>
> His 1990 version... "In testimony before the Joint Economic Committee in
> January 1990, on the eve of the failure of Drexel Burnham Lambert, a
> signal event in the credit contraction of 1989-92, Greenspan did not
> dwell on junk bonds, junk loans, failing banks, or in general on `the
> consequence of balance-sheet strains resulting from increased debt,' as
> he would put it in 1994. Although he did mention commercial real estate,
> among other macroeconomic trouble spots, he did not let on that interest
> rates would be progressively lowered to reduce the `financial strains'
> he would see so clearly four years later, while looking backward: `But
> such imbalances and dislocations as we see in the economy today probably
> do not suggest anything more than a temporary hesitation in the
> continuing expansion of the economy,' he wound up in that 1990
> appearance. The messy default by Washington Bancorp on its unrated
> commercial paper came only one week after a pronouncement by the Federal
> Reserve Board, also based in Washington, D.C., that no generalized
> credit contraction was under way."
>
> The purpose of this exercise is to point out that Greenspan has
> historically NOT had a strong grasp of the banking system or the
> financial markets. (For the sake of brevity, I have not used rosy
> scenario quotes from him just prior to the LTCM debacle.) He has,
> however, been willing to ease, and ease aggressively, thereby creating
> the right financial conditions for a mania. For this he is revered, but
> yet printing money should not be confused with knowing what you are
> doing. Greenspan is no Paul Volcker.
>
> -----Original Message-----
> From: listmanager@xxxxxxxxxxxxxxx [mailto:listmanager@xxxxxxxxxxxxxxx]On
> Behalf Of Levent Erbora
> Sent: Sunday, March 12, 2000 10:30 PM
> To: <realtraders@xxxxxxxxxxxxxxx> "realtraders@xxxxxxxxxxxxxxx"
> Subject: [RT] RE: Greenspan is a complete fool... or an absolute genius!
>
> Hi Bruce,
>
> I have a great deal of respect for Uncle Greeny's intellect, brilliance
> and what he has done for this country and the world in general.
> And I think your "conspiracy theory" makes a whole lotta more sense than
> anything else I've seen on the subject, here in this list or anywhere
> else.
>
> Best regards,
>
> Levent
>
> -----Original Message-----
> From: BruceB [SMTP:bruceb@xxxxxxxxxxxxx]
> Sent: Sunday, March 12, 2000 11:56 PM
> To: realtraders@xxxxxxxxxxxxxxx
> Subject: [RT] Greenspan is a complete fool... or an absolute genius!
>
> For a few months now I've been coming to the painful conclusion that
> Alan
> Greenspan isn't a very unintelligent man...............
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