What a mess

What caused the economic crises? "Greedy bankers" says some people. There is certainly a lot of greed about. For example, the people who trampled a part time Security Guard to death at a Walmart on Long Island (as he shielded a fallen pregnant women from them) were certainly greedy. Even after it was announced they had killed a man they still did not want to give up shopping for bargains in the sale and were very angry at being removed from the store. But I doubt there were any bankers in the Walmart sale crowd - although I am open to being proved wrong. And the lawyers who are talking about "going after Walmart" over the death are greedy also - they are targeting Walmart, rather than the mob of shoppers, because Walmart has "deep pockets". But these lawyers are not bankers. ... A credit boom can only carry on if it is supported by a Central Bank - whatever this Central Bank is called. This is why the credit-money bubble of the late 1920's was bigger than previous credit-money bubbles of American history. Because the Federal Reserve system, specifically New York Federal Reserve Bank Governor Ben Strong, had pushed it up and up. Do people remember the newspaper headlines every so often between 1987 and 2007? Specially the "Alan Greenspan saves the world" stories? Ever wondered what the great Alan Greenspan, Chairman of the Federal Reserve, had actually done? What he had done is as follows: Every time the credit-money bubble looked like it was finally going to burst Alan Greenspan jumped in and increased the money supply to "save" things. And he did prevent the credit bubble bursting - but at the price of making it bigger and bigger. Without this increase in the money supply, ACORN and Chris Dodd and Barney Frank and Freddie Mac and Fannie Mae, and the private banks, insurance companies (like A.I.G.) and other such would have no funny money to work with. They could not have wreaked everything without the ammunition (the money) Alan Greenspan was indirectly giving them. Of course he did not work alone, for example the present head of the New York Fed (who will be Treasury Secretary soon) has been involved in almost every bailout since Mexico in 1995. Samizdata.net

One blogger's two cents. Glad someone can spare two cents. I wish I had something intelligent to ad to this report. All that wants to go on the screen are a bunch of complaints about being broke. I remember telling someone in the early naughts that Greenspan had only to come on TV and say in a flat drone that "All is well." and the stock market soared. It turns out all to have been a shame. The man is a politician. That is the most damning thing I can think of at the moment.

Go read the whole thing.