November 15, 2005

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Greenspan's Wake-Up Peep

I have been stunned over the last four years as Bush has spent money like a drunken sailor in Washington while giving money back to the rich, with no plans to pay the piper - despite pretending to stand for small government. What I've found even more shocking is the fact that his economics advisers and Fed Chairman Alan Greenspan have stood by and watched the madness alrgely approvingly.

Now that Greenspan is becoming a lame duck and about to hand over the reins of the US (and world) economy over to his successor, perhaps he feels comfortable giving more of a 'reality-based' commentary. He said that the US's soaring trade deficits "cannot persist indefinitely." He added that "at some point, investors will balk at further financing." No kidding, Al. Of course, and certainly if US deficit spending careens along its crazy current trajectory.

Perhaps the other lame duck, the one in the White House, ought to take heed of that fact as he prepares to head out to Asia, home to his biggest bankers. As Bush talks to China, the fastest-growing owner of US Treasuries, and persuades them to drop their fixed exchange rate, I hope the little light goes off in his head that warns him that that would entail them selling off most of their US currency holdings and converting them into Ren Min Bi.

But then Alan backed off in his statement from lecturing his golden boy, saying that there was little "US policymakers can or should do to stem this natural evolution of market forces." Oh really? How about spending less foreign money?

posted by HK Dave on 11.15.05 at 09:22 AM in the Economics/Finance category.


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