Wednesday, April 9, 2008

Greenspan's Genius Stands in the Balance of Free Markets

Former Federal Reserve Chairman Greenspan has been on a mission lately and we hope it reverberates throughout the 2008 election run. Since his retirement in 2006, his legacy has been scarred by today's housing bubble and his dovish/low interest rate policy from 2001 to 2003. From the Wall Street Journal to the Financial Times, to a live interview with Maria Bartiromo on CNBC Tuesday April 8th, his campaigning would be considered aggressive for most 52 year olds, and Greenspan has three decades on those boomers. There's an explanation for the 82 year old’s rational exuberance, and we want our readers to grasp it.

The Financial Times published a Greenspan article this week entitled, "The Fed is blameless on the property bubble." We read the article and agree with Greenspan's arguments. He admits that his Fed was very "leave it alone/laissez-faire" with monetary policy. It would be good if Adam Smith, was to rise up and teach all of the political leaders the philosophies in ‘The Wealth of Nations’. Or, if not, perhaps Greenspan can still save us from excruciating future regulatory pains.

It wasn't Greenspan's mortgage company that signed a single home loan, nor was it his Investment Bank that created & traded in the subprime ARM pit. None of his underlings went to jail or served a single day of community service. Welcome to the politics of money and banking; embrace it while it's here...

In an interview with the Wall Street Journal, Greenspan said, "I was praised for things I didn't do. I am now being blamed for things I didn't do." We think the piece is misnamed: "Greenspan Goes on Defensive". We think Greenspan is in the 'offensive' huddle, and well into the last drive of the game. Shame on us for ever saying a bad word about Greenspan and shame on anyone who utters a bad word about the man going forward. Even his paradoxical laissez-faire view while advocating the Gold standard may still one day be accepted as, well...

http://online.wsj.com/article/SB120760341392296107.html?mod=todays_us_nonsub_page_one

Although Greenspan admits to opening the door to "irrational speculation" in the credit and real estate markets, he never forced one boomer to flip their California condo or home. Here's the Wikipedia link for Greenspan if any doubt remains: (http://en.wikipedia.org/wiki/Alan_Greenspan). Feel free to collaborate with Wikipedia on any errors or omissions.

A couple of recent Greenspan quotes:

"The [wrong] evaluation of this period -- and how to avoid the problems associated with it -- will give you the wrong answers and the wrong policies.”

"I am reasonably certain that I am right here." If proved wrong", he says, "I will change. I do not have a vested interest in holding wrong ideas."

Now understand that Bill Gates believes in giving people a second chance. Can you think of anyone more hurt and qualified to advise us out of the current crisis and future crises? We can't. We feel the politics of the 2008 elections will bring heated debates and push for greater transparency in the credit and real estate markets. We’re not opposed to hearing Greenspan's opinions in the future. In fact we would welcome more of his ‘free market’ wisdom.

We do NOT want a Donkey or an Elephant in the White House who seeks to regulate the financial sector, and we surely don't want to vote for any animal who admits that regulations are part of their platform. IF we begin regulating the financial sector because of one event, we could erase all free markets by 2050.

In a free market system there must be losers, and that's why free markets humble most investors eventually. Sadly though, this time the wheel landed on the most widely held asset -REAL ESTATE- therefore very few missed this indiscriminate hammer.

One of our green eyes is smiling because the government did take aggressive monetary and political action, while the other brown eye is crying because of the potential ramifications of regulations ahead. We don’t want to see ANY government regulations. The free market system is a much better corrective mechanism than anything proposed by lobbied Washington politicians.

Here's what stands in the balance: The Psychology of the Call team feels that every red blooded American and foreign reader who embraces the free market system must understand Greenspan's Genius: According to the Wall Street Journal: "The scrutiny of Mr. Greenspan's record has taken on urgency now that the Bush administration and congressional Democrats are skirmishing over how to overhaul U.S. financial regulation. If Mr. Greenspan's critics prevail, then financial companies will likely face tighter oversight and less freedom in the products they offer. If Mr. Greenspan's views carry the day, the trend toward self-policing will continue. A repudiation of Mr. Greenspan's monetary policies could tempt the Fed to raise interest rates relatively quickly after the current crisis passes, and even attempt to deflate future bubbles with higher interest rates."

We welcome "self-policing" in the financial sector and so should you. Our free market system is in the eye of a deadly storm. It is standing trial during the 2008 Presidential election. No one should attempt to pin a tail on the financial sector. We won't support any animal, Donkey or Elephant, if they want to use police-dog tactics and wag our free market system around. Free markets will never evolve with increased regulation. They will only be choked and capital will be forced to greener pastures, perhaps Euro zone and Japan.

Finally, we don't think Greenspan was being "defensive" with the Wall Street Journal. We strongly believe Greenspan's genius must be read, explained, copied, pasted, printed, emailed and understood. It is a message of admittance, wisdom, second chances, and prime expertise.

We’re putting our necks on the guillotine: Whoever Greenspan backs for President in 2008 must win for our financial markets to exist as we know them; or forever Rest In Peace with Adam Smith and his ‘Wealth of Nations.

The Psychology of the Call team wants to thank every reader and supporter in no fewer than 59 countries for letting us to be ourselves, yet again

11 comments:

Anonymous said...

You make some points, but I still hate Greenspan.

Anonymous said...

Hillary Clinton has asked him for advice, supposedly.

Anonymous said...

I would like to see Greenspan endorse Mayor Bloomberg. That would be interesting ...

Anonymous said...

I never liked Greenspan and your story doesn't change my opinion.

Anonymous said...

I went to school in NYC and feel Wall Streeters blame him way way too much. Bear Stearns made their own beds imo.

Anonymous said...

I read from Botswana South Africa. Hello to you and good story!

Anonymous said...

why do you call yourself a team if you are only 1 person?

The Call Team said...

All primary analysis is performed by one individual with the experience and knowledge necessary to do so. He is assisted in various facets of his work by others.

Anonymous said...

I like the fact the blog is updated regularly, keep it up.
Hong Kong.

Anonymous said...

Alan Greenspan is the Source = of the majority of all Malinvestment currently tormenting the nation and the world! Anyone who denies this either doesn't understands the economics involved or is a direct beneficiary of Greenspan Interest Rate Largesse. Artificially low interest rates caused the problems we are experiencing today. Bailout after Bailout prevent natural creative destruction much like the Last 20 years of Japanese Economic history. Too much to say on this topic . . . .

The Call Team said...

We thank you and respect your comments. Have you read our entire piece and still disagree? Do you not feel the free market system, (esp. the financial sector) stands in the cross hairs of political regulation and destruction like the Airline Industry? We are for lower taxes and less regulation. And you?