She Wants Who to Save Us?
by matt at 6:00 am on March 27th, 2008 in 2008 Presidential, Economy, Hillary, i can has nukular futbolAs we near the end of the Bush epoch, I notice that my outrage meter has fallen out of calibration. I don’t yell at the TV grandpa-style anymore, and even as Dick Cheney took it to the next level down in his campaign to remove the ‘people’ from “of the people, by the people, for the people,” I couldn’t even muster a post. And it’s not that isn’t significant — he was essentially telling democracy to “go Cheney itself” — it’s just that he and others in his office, and the administration in general, have been doing this for years, a fact documented many times over in our archives.
This doesn’t mean I’m completely numb, but it does take something special to really elevate my hackles. And Hillary Clinton is more than up to the task:
Mrs. Clinton proposed several other moves to deal with foreclosures, like tapping two former chairmen of the Federal Reserve, Alan Greenspan and Paul A. Volcker, and former Treasury Secretary Robert E. Rubin, to lead a “high-level emergency working group” to recommend ways to restructure at-risk mortgages to help avert more foreclosures.
This really quite remarkable. As others have noted, Greenspan is probably more responsible for the housing bubble and resulting credit crunch than any other single person. By keeping interest rates artificially and unsustainably low for too long, and then when rates had nowhere to go but up, famously recommending that buyers take out adjustable rate mortgages, Greenspan couldn’t have done more damage to the system had he hired Britney Spears to run the currency printing presses.
But it’s much, much worse than simply Greenspan being tapped to “fix” a crisis he invented. The real problem is that this wouldn’t be Greenspan’s first tour on such a “high-level emergency working group.” Back in 1983, he was chairman of the…Greenspan Commission, charged with “fixing” social security. His fix created huge surpluses that were then used to cover up budget deficits, all before Easy Al sided with President Bush in his corrosive quest to privatize Social Security by suggesting that those huge surpluses simply didn’t exist.
And this is the guy Hillary wants to play the role of Winston Wolf in the housing crisis version of Pulp Fiction?
There are plenty of smart economists who Clinton could have named. In fact, she did name one in Volcker, who I just might write in on my Presidential ballot*. What I can’t figure out is how Clinton can miss the difference between Volcker, who got this country out of a serious crisis, and Greenspan, who got us into a few. And that, is truly outrageous.
*And yes, Volcker has endorsed Obama. I didn’t say he was perfect.
tom wrote:
i want $100 bills with brittney’s bald beaver in place of ben franklin.
also, the best winston wolf quote: “let’s not start sucking each other’s dicks quite yet.” that shit cracks me up.
Posted 27 Mar 2008 at 9:00 am ¶
matt wrote:
i think that would be massively deflationary.
Posted 27 Mar 2008 at 9:15 am ¶
sarabeth wrote:
some things would inflate, though
Posted 27 Mar 2008 at 9:55 am ¶
foreclosurefish wrote:
Clinton probably recognizes that Volcker caused massive pain in the economy to solve the crisis of the 1970’s stagflation.
Greenspan, on the other hand, just looks for a new bubble to inflate to keep up the facade of prosperity.
Carter was blamed for the poor economy while Bill Clinton shared some of the spotlight for the strong economy of the 1990’s. I’d guess Hillary just wants to keep up appearances of a strong economy while sending the bubble in another direction for a few more years.
Yes, she named both Volcker and Greenspan as possible members of her commission. But would it surprise anyone if the recommendation at the end was more easy credit, lower rates, more inflation, and more bubbles?
Posted 27 Mar 2008 at 10:51 am ¶
matt wrote:
all academic at this point, but i’d be very surprised if volcker stuck around for that kind of conclusion.
Posted 27 Mar 2008 at 10:59 am ¶
Jimmy wrote:
“Volcker caused massive pain in the economy to solve the crisis of the 1970’s stagflation.”
Yes, but I wouldn’t mind a little Volcker type action in the future. Not now for sure but maybe from mid 2009 to mid 2010. A nice fed funds rate of around 6-7% to help strengthen the dollar and bring down inflation (helped by getting rid of corn ethanol- let’s use food for food “not fuel”). People should really be considering taking out as big a mortgage as they can “easily” pay while interest rates are under 5-6% so they can invest the difference at higher rates. I can’t wait to buy some bonds and CD’s when I’m getting 8% on my investment 2-5 yrs from now. I don’t know exactly when rates will be that high but I bet it’s within that timeframe.
Posted 30 Mar 2008 at 5:14 pm ¶
sarabeth wrote:
How much money are you willing to bet, and what rate exactly are you betting will be at 8% 2-5 yrs from now?
Posted 30 Mar 2008 at 5:52 pm ¶
Jimmy wrote:
#7
I’m primarily talking about CD’s but I also like zero-coupon bonds. Is 6% a certainty? No, but getting there isn’t really that big of a stretch; I was able to get 6.25% on a 18 month CD back in Sep of 2006. Look at how quickly we came down to 2.25. It won’t take more than 18-24 months to get back above 5 once the rate increases begin. I actually meant 3-5 yrs because it will most likely take 18-24 months just to get above 5% and I’m expecting a fed funds rate of over 6%. The 3-5 yr timeframe seems quite realistic unless you think rates are going more than .25-.50 lower from here (I certainly hope not) and that we won’t have started a rate increase cycle by early next yr (I certainly hope we have by then).
I’d put 15-20% of my assets into such 8%+ ylding CD’s and zero-coupon bonds.
Posted 30 Mar 2008 at 11:04 pm ¶
sarabeth wrote:
So are you or are you not willing to bet that rates will go above 8% in 2-5 years (now amended to 3-5 years)?
Posted 31 Mar 2008 at 4:08 am ¶
Jimmy wrote:
#9
Sure Mortimer. We’ll make it “the usual amount”.
I don’t know why you would emphasis 2-5 going to 3-5 though. The long term figure is what really matters and yes I think we could be at those levels by this time in 2013 (I wonder who the president will be then?). GL Mortimer.
Posted 31 Mar 2008 at 6:32 pm ¶