 |
McCain: Everything I Know About the Economy, I Learned from Alan Greenspan
Timing, as they say, is everything. By that measure, John McCain is having a very bad day. First, just one day after his own visit to Baghdad, Vice President Dick Cheney showed up in Iraq to remind Americans that McCain is inextricably linked to President Bush. Then just as the Federal Reserve rushed into to bail out faltering Wall Street investment banks and avert a financial panic, its former chairman Alan Greenspan disavowed any responsibility for it. Sadly, everything John McCain knows about the economy, he learned from Alan Greenspan.
McCain long ago made clear that the American economy is not his strong suit. In November 2005, McCain acknowledged:
"I'm going to be honest: I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated."
Two years later, McCain admitted making little progress in grasping Economics 101. As the Boston Globe reported in December 2007, economic policy is "a subject on [which] McCain has said he feels he [is] unknowledgeable [and] that filling the void would be a priority when selecting a vice-presidential nominee." To address this glaring shortfall, the soon-to-be Republican presidential nominee claimed he had turned to the equivalent of Economics for Dummies:
"The issue of economics is not something I've understood as well as I should. I've got Greenspan's book."
Given the housing market meltdown and the hysteria gripping Wall Street and the global financial system, Americans should be concerned about the identity of McCain's mentor. After all, Greenspan's bubblenomics played a critical role in bringing the United States to the brink of economic disaster.
In a stunningly prescient April 2004 article ("There Goes the Neighborhood") in the Washington Monthly, Benjamin Wallace-Wells argued that home prices were about to plummet and take the economy down with them.
During the last week in February [2004], when Greenspan recommended that the home-owning public take a good hard look at switching from fixed-rate mortgages, under whose terms payments stay the same no matter what interest rates do, to adjustable rate mortgages (ARMs), where payments fluctuate along with interest rates--which, right now, makes close to zero sense. Interest rates are lower than they've been in 30 years, and, with all economists predicting a general economic upturn, and Bush's budget deficit and the weak dollar sucking up capital, little doubt exists that interest rates must rise, in which case, switching from a fixed-rate to adjustable-rate mortgage would be pretty costly for any family naive enough to take Greenspan at his word. The episode did not pass completely without critical notice. It was "the strangest bit of advice ever to be proffered by an American central banker," Jim Grant, publisher of Grant's Interest Rate Observer, told the San Francisco Chronicle. Then the press moved on: "Oh, it's just Greenspan"...
...Greenspan's rather ham-handed effort to get them to go for ARMs, is a sign not of the chairman's own eccentricity or advanced age, but, instead, of the economy's current unsteadiness. Greenspan knows, perhaps better than anyone, that this economy is perched nervously on top of a wobbly, Dr. Seuss-like tower. Our recovery is propped up by consumer spending, which is in turn propped up by mortgage refinancing, and if that refinancing dries up before more props can be put in, the whole edifice could fall. "Since long-term interest rates cannot fall low enough to facilitate another wave of fixed-rate refinancings, he is trying to encourage homeowners to refinance one last time: fixed to ARM," Peter Schiff, president of Euro Pacific Capital in Los Angeles told the San Francisco Chronicle.
Over the previous five years, Americans had extracted almost $1.6 trillion in cash from refinancing and spent virtually all of it on consumer goods purchases. As Wallace-Wells noted four years ago, "Greenspan has played enabler to this boom," and concluded:
"To get out of the recession, he had to rely on, stay mum about, and even encourage a housing bubble. Now, that very bubble may be the thing that destroys the recovery he has sought to create."
Fast forward to 2008 and the chickens are coming home to roost for Wall Street and American homeowners alike. On Friday, the Federal Reserve scrambled to forestall the collapse of Bear Stearns, which had been at the forefront of the troubled mortgage securities marketplace. Sunday, JP Morgan purchased Bear Stearns for just a fraction of its share price just days earlier. 24 hours later, the Fed acted again to quiet plummeting financial markets worldwide and avert panic in New York. As the New York Times reported:
Hoping to avoid a systemic meltdown in financial markets, the Federal Reserve on Sunday approved a $30 billion credit line to engineer the takeover of Bear Stearns and announced an open-ended lending program for the biggest investment firms on Wall Street.
In a third move aimed at helping banks and thrifts, the Fed also lowered the rate for borrowing from its so-called discount window by a quarter of a percentage point, to 3.25 percent.
The moves amounted to a sweeping and apparently unprecedented attempt by the Federal Reserve to rescue the nation's financial markets from what officials feared could be a chain reaction of defaults.
But writing in the Financial Times on Sunday, Alan Greenspan seemed blissfully unconcerned about the frenzied market intervention of his successor, Ben Bernanke, even as he acknowledged that "the current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War". Speaking in his trademark dry, detached language, Greenspan ironically looked to the salvation of "market flexibility and open competition." More ironic still, given Wallace-Wells' history, was Greenspan's conclusion:
"But if, as I strongly suspect, periods of euphoria are very difficult to suppress as they build, they will not collapse until the speculative fever breaks on its own. Paradoxically, to the extent risk management succeeds in identifying such episodes, it can prolong and enlarge the period of euphoria...
..In the current crisis, as in past crises, we can learn much, and policy in the future will be informed by these lessons."
For the American people, one lesson should surely be obvious. When it comes to risk management, the United States cannot risk having John McCain and his Alan Greenspan crib notes at the helm of the troubled American economy.
|
JOHN McCAIN’S 3R ECONOMIC PLAN 2008
Abbreviated version
Republican Candidate John McCain with a progressive outlook, comes through for America with his 3R economic plan.
NUTS AND BOLTS of the plan are simple.
RETHINK REFORM REINVENT
As Americans we must Rethink our role as the new leader of industrial nations while we Reform our mindset of what best benefits not only the US Economy but the world economy. We must always keep in mind that a stronger America is a Stronger World and we MUST always make it first and foremost to own a stake in what matter most.
Americans must Reinvent our national approach to regain our strength as the global leader in this new McCain 3R Phase of USA manufacturing.
Our goals should no longer be steeped in the pure greed of strict capitalism but rather in a progressive entrepreneurship system where smaller companies are formed by private individuals and private sector groups of goal oriented teammates.
Speculators and accredited private investors will pick and choose these businesses, which may also be grouped in investment packages such as with current commodity and futures trading. The laws to do this exist and people are waiting for the next best investment.
Investing in the American workforce has always been in high demand until the greedy AFL CIO took control of the working class and chased away or ruined the corporations!
The growth will be phenomenal as a Corporation or LLC opened for business may fail on occasion, but with proper training and support from the 3R Schools, a simple manufacturing business may be purchased or simply revamped for a new opportunity in the US Commodity Market as well as with the manufacturing arena.
The highly profitable products to be manufactured are a concern for a huge Corporation looking at only the bottom dollar, but smaller LLC and Corporations in the manufacturing world are often better run with limited production items sold at reasonable prices. Profits are made not only from the USA made wholesale goods, but the massive USA based jobs provided along with the stocks and commodities in the market.
The move from fossil fuels to affordable energy can only be done in one of two ways:
1. Halt all projects paid for with taxes at the pump and other fuel taxes, OR,
2. John McCain’s Economic Plan involving the 3R’s, Rethink, Reform, Reinvent.
McCain’s 3R is technical, closely monitored, rapid and hands on training course from professionals to create new professionals. Thousands of currently-job-displaced “once leaders in the manufacturing arena” will be paid to train and instruct in the 3R plan.
These new leaders will step up to help create a whole new style of prosperous America. A massive restructuring that will provide thousands of new American manufacturing companies and create millions of new jobs for infrastructure alone.
Americans are going back to school where they are paid to reinvent their skills and learn new skills to design and lead their personal LLC, Corporation or joint venture company.
That’s easy enough to comprehend and just as easy to implement.
The 3R plan is designed as a six-month rapid advancement system.
Graduates may return for additional skill enhancements from time to time, or step up after new advanced training in executive management.
New jobs are the mainstay for creating a new guard for Social Security.
Initial estimates of 1 in 5 students will begin his or her own company and drive even more Americans into a viable lifestyle with real jobs, real benefits and a retirement to look forward to. By making these opportunities available without the crippling AFL CIO interference and their mob like influence, America will explode into the world market.
All of this governed under strict employee benefits as provided by state and federal standards and improved upon by each mfg operation to provide security and safety for these new 3R American workers.
This 3R plan may be accomplished without costing taxpayers (or the government) additional funds. America has the means to follow through with John McCain’s 3R plan, ready and in place across the USA. The buildings we need for our initial 3R schooling and MFG arenas sit vacant or abandoned.
By assuming leases on abandoned stores and factories across America with 3R schools and mini-manufacturing training centers, we may allow building owners to write-off their donations and reduced leases in taxes over a few years, and even more if they donate the space.
USA made tools, power equipment, bicycles, computers, TV’s, radios, furniture, building material, clothing, automotive products… the list is endless, will become the pride of American workers once again.
These ideas are great in themselves, but an entirely new stream of jobs to supply support for these manufacturing companies and their hundreds of thousands of new employees will be created and expanded. Business and infrastructure from shopping malls to homes, new roads to restaurants, grocery stores to government outlets and so much more…
McCain’s Straight Talk and decisive nature embodies a Progressive Theodore Roosevelt more than any US presidential candidate in history since the original Rough Rider blazed the greatest era of growth in America.
The 3R plan just makes sense.
Posted by jlmealer on July 13, 2008 10:04 AMTHIS DRAFT COURTESY OF:
John Lewis Mealer
founding president Mealer Companies
www.betterconstructed.com (original promotional site)