Monday, September 17, 2007

The Über-Ghost

Alan Greenspan is back, looming over the markets, and, even more, over the current chairman of the Federal Reserve! Not that A.G. ever left the scene completely; his comments on an increased likelihood of a recession haunted the markets more than once this year.

But now he´s back for more. His memoirs "The Age of Turbulence: Adventures in a New World", due to hit the bookshelves on September 17, 2007 - which happens to be, incidentally, one day ahead of the Federal Reserve´s next, both eagerly and nervously awaited rate-decision - are bound to haunt the markets, the Bush administration, and his successor as Federal Reserve chairman, Ben Bernanke.

Poor Ben, it should be added, is not in an enviable position right now, stuck as he is between a rock and a hard place: On one side (the rock), the subprime crisis, recent market turmoil and market expectations have put an almost unbearable pressure on him and his Fed to lower interest rates for the first time in more than four years.

On the other hand (the hard place), the Greenback has been on a plunge, not only against the European currency, but against all major currencies, with the notable exception of the Japanese Yen.

Now, while a falling Dollar may be good for exporters, it leads to increased imported inflation, and to a flight of foreign capital from US assets (e.g., stocks: if you, coming from a Euro country, buy shares of an American company, e.g. Microsoft, as the dollar´s value dwindles, so does your Microsoft stocks´, even if the company´s shares remain unchanged).

And now, here is the honorable Mr. Alan Greenspan, former head of the Federal Reserve, with the luxury of no longer having to give a damn, and in a position of pissing against the legs of the government, while at the same time taking an obviously sadistic pleasure to expose to his successor the dilemmas and problems Ben Bernanke and the Fed are facing - dilemmas and problems, that are no longer his to deal with (so-called SEPs - Somebody Else´s Problems).

Al and Ben

First, Greenspan paints a dark scenario on what to expect in terms of inflation:

To keep inflation under 2 percent, ``the Fed, given my scenario, would have to constrain monetary expansion so drastically that it could temporarily drive up interest rates into the double-digit range not seen since the days of Paul Volcker,'' Greenspan wrote.


Consumer prices, which increased at an average annual rate of 3.1 percent during Greenspan's tenure, will likely climb by 4.5 percent or more a year in the future, he wrote.


Greenspan also forecast an end to the anti-inflation pressures from the inclusion of China and other emerging economies into the global trading system.


The third source of pressure on inflation will come from U.S. government budget deficits, according to Greenspan. Federal spending absorbs private savings and uses them for less productive purposes, imparting ``a bias toward inflation'' Greenspan wrote.

The federal deficit is something particularly loath to Alan Greenspan: "Deficits don't matter,' to my chagrin, became part of the Republicans' rhetoric,'' he complains about the current administrations budget discipline (or , more precisely, lack thereof).

Next, he outlines what to expect in terms of economic growth, which is no good news, either:

The economy will probably slow to a pace of under 2.5 percent on average from now until 2030, Greenspan forecast in the book.


Productivity gains averaged a 1.7 percent annual rate in the first six months of this year, down from a 3.6 percent rate during the high-technology boom of 1999. Greenspan forecast a long-term average of 2 percent for increases in output per hour.

He expects increased pressure on the Fed from politics, endangering the agency´s - ahem - independence (the outcome of the September 18 Fed meeting will be a first indicator on how independent the Fed actually is):

"Federal Reserve independence is not set in stone,'' wrote Greenspan, 81, who led the Fed for 18 years until January 2006. ``The dysfunctional state of American politics does not give me great confidence in the short run'' and there may be ``a return of populist, anti-Fed rhetoric,'' he wrote.

(All above quotations are from this Bloomberg article).

Finally, he has the chuzpe to reveal the real motives behind the war against Iraq. No, not the fight against terrorism, or against a rogue regime in the possession of WMDs (the latest rhethorical spin of the government has it that Saddam Hussein had to be removed to prevent him from producing weapons of mass destruction in the future), or to bring freedom, democracy and popcorn to the region.

The war against Iraq was guided by motives related to (surprise, surprise!) oil. Greenspan himself was a proponent of war against Iraq, fearing that control over the Strait of Hormuz - an important passage for oil transports - would enable Saddam Hussein to threaten the USA and its allies.

In essence, Greenspan admits that the whole WMD rhethoric used to justify the war against Iraq was and is nothing but a load of hogwash:

"Whatever their publicized angst over Saddam Hussein's `weapons of mass destruction,' American and British authorities were also concerned about violence in an area that harbors a resource indispensable for the functioning of the world economy."

(Quoted here.)

And as if the turmoil his book is already creating wasn´t enough, Greenspan keeps talking to the press - THE PRESS, for crying out loud! - making sure his irreverent opinions aren´t overheard.

Just in case his earlier recession-warnings will not be forgotten or go unheeded, in his latest interview with the Financial Times, he glumly forecasts that the fall in US house prices triggered by the latest subprime crisis will likely be bigger than expected.

And, heresy of heresies, in another interview (to be published in the September 20 issue of German magazine "Der Stern"), he openly talks about the possibility of the Euro replacing the US Dollar as reserve currency of choice (quoted in the International Herald Tribune).

That will most likely not earn him a long friends list within the administration. But, quite likely, he won´t give a shit.

Mr. Universe

Sunday, September 16, 2007

Beware Of The Pirates!

They steal. They lie. They blunder. And, ultimately, they kill.

I remember that day very vividly. The minute stock futures tanked - it was around three o´clock in the afternoon in Germany -, we figured something had happened. We turned on the TV and were glued to CNN Europe.

At first there was total confusion. Reports initially talked about a "small plane" that had crashed into one of the World Trade Center Twin Towers.

But why? It didn´t look like a weather related accident, since it was a clear and wonderful September morning in New York.

Then, gradually, as events evolved, we watched in shock and horror as the second plane smashed into the second tower, broadcast live by CNN, like a well-orchestrated, marcabre Hollywook movie. Only this was real.

When the headline "Pentagon on fire" scrolled across the screen, initially I didn´t grasp that it was a literal fire, not one figuratively spoken of.

What was going on?

Where was the government? Where was Dubya?

Complete chaos.

The horror kept unfolding.

I remember images of people desperately waving from the top floors - above where the planes had struck -, thinking to myself, "Someone will, someone must be able to save them", somehow believing that it was impossible to witness those men and women die.

I was naively thinking that because the world was able to watch all of this happening, somehow "someone" must be able to help, perhaps taking them aboard a helicopter. Yeah, right, like it was a Hollywood movie!

Then there were accounts on the Internet, equally contradictory and confusing as that what was being broadcast on TV. I remember talk about an intercom message in the towers, telling people to remain calm and at their desks, because everything was under control (NEVER ever believe officials and authorities telling you that one, NEVER!).

I will never forget the images of the people jumping, out of desperation, because the heat and air were becoming unbearable.

I will never forget Howard Lutnick, CEO of broker firm Cantor Fitzgerald, bursting out in tears. Cantor Fitzgerald lost 658 of a total of 1000 employees. (Lutnick himself survived, because he had taken his son to his first day of kindergarten that day. His brother, Gary, was among those who died.)

I will also never forget Bush (after he finally materialized), and his blabber about "I saw the plane hit the first tower, and I was thinking to myself, what a terrible pilot."

I was thinking to myself, "What a weird reaction. I mean, a plane crashes into one of the WTC towers, and all this guy has to say is `What a terrible pilot?´ And - you saw the plane hit the first tower? How could you? At that point, there was no film material of that ...".

I also remember how surprised I was that amongst all this total confusion and chaos, all of a sudden authorities were able to declare who was behind these atrocities: Osama Bin Laden´s Al-Quaeda.

I remember witnessing in horror as the towers collapsed.

Many questions remain unanswered.

And then ...

It was the hour of the Pirates of the Constitution.

Remember the recount of the Florida votes? Nobody, in these times of national crisis, could have possibly doubted the government, much less the President. This would have been terribly unpatriotic. Or would it?

9/11 serves as an excuse to brainwash and blindfold citizens by telling us that wars in Afghanistan and Iraq and Iran have been, are and will be waged in the name of defending our freedom, and the freedom of those living there.

(Digression: Not that I ever cared for the oppressive Taliban regime and its system contemptous of human rights. But ousting a regime because it trampled the rights of its citizens, particularly of women, was not the reason for attacking Afghanistan. At least human rights in Afghanistan had not been an issue from 1997 to as late as July 2001, when larger issues were at stake, namely oil:

"When George W. Bush took office in 2001, his administration made new overtures to the Taliban, and the pipeline deal gained renewed support, as an incentive to get the Taliban to make political concessions and form a broader government.


In March 2001, several Taliban officials, including Sayed Rahmattulah Hashimi, Mullah Omar's personal advisor, were invited to Washington by their U.S. lobbyist, Leila Helms, the niece of former CIA Director Richard Helms. The agenda included discussions of extraditing bin Laden as well as facilitating American companies' access to oil reserves in central Asia." Quoted here.

And not that I cared much for Saddam Hussein either. But, contrary to what one of three Americans to this day have successfully been brought to believe, he had nothing to do with 9/11. Or Al-Queda for that matter.)

The horrible events of 9/11 served and continue to serve as a perfect excuse to wreak havoc on our constitutions. Not only in the US of A, but also in Germany, in the UK, in France, in Spain, in Australia ...

They serve as an excuse to happily chop away on civil rights and liberties.

Prisoners kept at will without trial. Prisoners subjected to torture. Citizens (who turned out to be have done nothing wrong, apart from being Muslims, like Khaled Masri) abducted to CIA prison camps, with the knowledge of our government, all covered up in a web of lies.

The very freedom that our governments are purportedly intent on defending, they seem to have very little problem sacrificing by silently doing away with constitutional rights.

Shame on you, Pirates of the Constitution!

We shall and we will never forget.

Sunday, September 02, 2007

Ship of Fools

Ship of Bush

Side acknowlegements: This wonderful parody of "Ship of Fools" is from As usual, I found it by picture googling .

Crazy times in a crazy world. Not that it´s ever been much different, but currently it feels to me as if the speed is accelerating.

The bursting bubble of borrowed material wealth has, or so it turns out, been but an illusion that everyone pretended was a reality, until the foundation started to crumble in a manner that could no longer be ignored. And I am not only referring to collapsing bridges, nor, this time, to the fact the we, the wealthy nations, have been living at the expense of other, less fortunate ones.

No, this time it´s damage we have been inflicting onto ourselves and to one another, by repackaging, hiding, and shifting parcels of worthless paper, neatly wrapped into fancy looking packages that are now popping up seemingly everywhere, and much to everyone´s surprise.

Wipes your account clean real fast!

Negative savings rate, anyone? "Credit crunch", by the way, is not the latest ceral. If anything, it could turn out to be serial, as in "serial killer".

The dripping exodus not only in corporations, but also within administrations (Rummy, Rove, Gonzales, Snow - who´s next? Condi, perhaps?) gives me an unhealthy feeling in my guts. Especially when taking this into account (don´t believe SFGate? Then check out the ultimative authoritative source itself). Or that.

Are the more knowledgeable fools jumping ship? Do they know something that we don´t? (I most certainly assume they do, I´d just like to know what the hell it is!)

Blimey, I sound like the apocalyptic rider. Or like one of these "The end is near!" prophets.

The End.

I´ve been spending too much time on various message boards, no doubt. There should be a surgeon general´s warning before letting anyone enter. Not that that would stop anyone, at least no more than the blunt warnings printed on cigarette and tobacco packages stop anyone from smoking.

The human race was dying out

No one left to scream and shout.

People walking on the moon

Smog will get you pretty soon.

Everyone was hanging out

Hanging up and hanging down

Hanging in and holding fast

Hope our little world will last.

Along came Mr. Goodtrips

Looking for a new ship.

Come on people better climb on board

Come on babe we're going home.

Ship of fools, Ship of fools.

The human race was dying out

No one left to scream and shout.

People walking on the moon

Smog gonna get you pretty soon.

Ship of fools, ship of fools

Ship of fools, ship of fools

Ship of fools, ship of fools

Climb on board

Ship's gonna leave you all, far behind.

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(The original "Ship of Fools" painting, by Hieronymous Bosch, drawsn c. 1490-1500)