Utopia Talk / Politics / Is Al Greenspan a traitor? HR says he is

Who Shot H.R. Member	Sun Jul 18 11:22:48 http://mon...enspan_bush_tax_cuts/index.htm LONDON (CNNMoney.com) -- Former Federal Reserve chief Alan Greenspan believes Congress should let the tax cuts enacted by President George W. Bush expire for all Americans in order to address the widening deficit, according to a TV interview airing Friday. "They should follow the law and let them lapse," Greenspan told Bloomberg TV's Judy Woodruff. The 2001 and 2003 tax cuts are due to expire at the end of the year. President Obama had promised to make them permanent for families making less than $250,000. (Read 'Bush tax cuts up in the air') But faced with growing fiscal challenges, there's debate in Washington about whether the country can afford to permanently extend the tax cuts. Greenspan, who backed the tax cuts when they were enacted, told Woodruff that allowing the cuts to lapse "probably will" slow growth, but that the risk posed by doing nothing about the deficit is greater. "I think we misunderstand the momentum of this deficit going forward," the former Fed chairman said in the interview.
Who Shot H.R. Member	Sun Jul 18 11:23:02 The interview http://www...x-cuts-expire-transcript-.html JUDY WOODRUFF: Doctor Alan Greenspan, thank you for talking with us. ALAN GREENSPAN: My pleasure. WOODRUFF: Fresh evidence this week of a slowdown in the economic recovery. Youâ??ve said recently that you think this is a typical pause. When do you think the economy is going to start strongly going again? What is it going to take? GREENSPAN: Well, let me add to that, because I also said in a quasi-qualification that we have just been through, and indeed are still in the throes of, the greatest financial crisis globally ever. We have never seen a shutdown in the availability of short-term credit of the extent to which that occurred around the world following the bankruptcy of Lehman Brothers in September 2008. So this is a different world. I nonetheless do conclude on the basis of all the balance of the evidence that what we are going through now is the typical pause that usually is associated with recovery. But this is not going to be a full- blown recovery. WOODRUFF: So what do you think the GDP is going to be this year and next year? GREENSPAN: Well, it is going to be slow. The second quarter, which looked to be in April fairly robust, now looks to be down to 2.5 percent growth rate. And we have not yet got all the figures for the month of June. We are estimating and guessing at certain of these numbers. But there is no evidence that there is a big pick up coming, but there is also no evidence of an actual double dip. So, I think it is sluggish. We should be in the area maybe of 3 percent growth for the rest of this year, after we come out of this temporary slump. WOODRUFF: And when do you -- what do you think the jobless rate, which is now 9.5 percent, is going to be a year from now? GREENSPAN: It will be lower, but not all that much lower. The strange fact about this is that what has kept the -- part of the reason why the unemployment rate has stayed high, as the economy has come back, is there was an extraordinary amount of squeeze going on in the corporate sector having as is invariably the case a major expansion of output. They were not looking at their cost structure. They are now, and they squeezed it down to the point where probably it cannot go much lower. WOODRUFF: So how long before we get back to even 6.5, 7 percent unemployment? GREENSPAN: That is not this year and probably not next. WOODRUFF: Befitting a central banker, you have always -- you have long expressed concern about deficits. They are bigger now than ever before. Everybody seems to be worried about the long term deficit issue, but in the short term, there is a debate about whether something should be done right now. The chief economist for Goldman Sachs, Jan Hatzius, for one, is saying the economy clearly needs a boost now from a government stimulus. Is he wrong? GREENSPAN: No, he is not wrong, but it is less conclusive than he stipulates. The reason is we do not really know the full impact of government stimulus. We can estimate the number of dollars of GDP which are created by certain government expenditures, because they are part of our actual GDP. And we probably could measure it, to a certain extent, the gross additions to jobs from that. WOODRUFF: Would that argue then for a government stimulus now? GREENSPAN: No, it would not largely because of the fact that the argument goes -- and it is again difficult to prove -- that one of the reasons why there is such uncertainty and risk aversion in the business community is fearful, of the inability on their part to judge what actions are coming next, and uncertainty is the death knell of capital markets. WOODRUFF: And you are saying government intervention -- government spending would be uncertainty? GREENSPAN: It is the size of government, it is the issue of the fact that an ever-increasing part of the American economy in the last year or so has moved under the aegis of government. And because it is very difficult to forecast what the actions of government is going to be, that creates an attitude on the part of the business community which is retrenchment, and you can see it everywhere. WOODRUFF: Is the United States more likely, Doctor Greenspan, to experience a debt crisis like what Greece has gone through, or a slow growth deflationary crisis like what we see Japan experiencing? GREENSPAN: It is going to depend very much on what we do from here. There is a growing fear, political set of pressures to come to grips with the deficit. I think it going to be far more difficult than anybody imagines. We are in a state of years -- a decade -- of major increases in federal spending and major tax cuts, none of which other than with borrowed money. WOODRUFF: Financial reform -- President Obama is shortly going to be signing a sweeping reform of financial regulation. You said last week that unless significant changes were made in that legislation, that you would be uncomfortable with it becoming law, in part because these new consumer protections in your view would reduce lending. But my question is, if everybody is following the rules, why would you expect that there would be less financial activity than before? GREENSPAN: Well, first of all, it is quite apparent that if you are making more stringent rules -- and I am not against that, I think that is the right thing to do -- you are restricting the amount of credit. We have not had a single subprime mortgage loan since January 2008. That market at the moment is dead. I mean, I have always thought it was very useful to have what turned out to be a very small, but very effective, subprime market until securitization took hold in 2004. And it expanded minority home ownership and I thought that was all to the good. That has now come to a dead halt. There are a lot of loans made currently by the banking system which are marginal. These loans will be eliminated and those marginal loans are largely the lower credit risks, lower income groups, and people who before would be going to pawn brokers. I do not think that is necessarily a good trend. WOODRUFF: Can this consumer agency be truly independent if it is housed inside the Federal Reserve? GREENSPAN: I do not know, but there is a much broader question here which relates to this. And that is, we in fact do not know what the consequence of this legislation is going to be. And the reason that an inordinately large part of it relegates to the regulators the -- it empowers them to make all sorts of rules on the principles put forward in the legislation. That is a very broad discretionary range. And I can go read through the 2,000-plus pages, which I have not done, and I will learn a lot about what the act is about. That will tell me a lot less than you might imagine as to what it actually is mandating, because until you get a regulation essentially promulgated by the individual regulators who are empowered to do so, you have no idea what the impact is going to be. WOODRUFF: Do you believe that this reform legislation leaves the Fed stronger or weaker? GREENSPAN: Well, it leaves it slightly weaker in the sense of its structure. And I was very concerned early on, when there was discussion of taking away supervisory authorities of the so- called community banks in this country, or some of the community, I should say, some of the community banks. I thought that would have been a very bad mistake. They did not do that. And the type of structural changes they made in the nature of the Federal Reserve banks is minimal. I would prefer they did not do it, but overall I would say it is a wash. Strangely, the additional power that the Fed has been given, I had not been in favor of. I do not think they can actually prevent the next crisis. What the mistake -- fundamentally, in a regulatory structure was -- is we misjudged the amount of capital financial institutions needed to have to meet the provisioning for losses. If we had adequate capital, Lehman Brothers would not have failed. And if they had, for example, 15 percent capital instead of 3 percent, and if Bear Stearns had similar numbers, they would have lost a great deal of money, but it is their shareholders who would have lost the money, not their lenders. What causes contagion is default of debt, and if you had adequate capital, by definition you prevent that. WOODRUFF: Quick follow -- do you think banks today are adequately capitalized? GREENSPAN: No, I do not. By that, I mean that they are not lending freely, and the reason they are not lending freely is they do not believe they are going to get their money back. And what that is essentially saying is that until you get capital up -- in my judgment -- a couple of percentage points more than it is, at least, you are going to find that banks are not going to feel sufficiently free to lend. And there is -- two concepts here, which I think is important to recognize. One of regulatory capital; the other is what the market requires. The market right now is requiring more than they actually have. Regulators are moving up to where the market requirements are. They are not there yet, but they will get there. And that is where we should be because, right now, our financial institutions are undercapitalized. WOODRUFF: Looking back for a moment, you get asked this question all the time, are there one or two decisions you made when you were Fed chairman, in light of this financial crisis, that you would have made differently? GREENSPAN: Well, the major mistake that I made, in retrospect -- and indeed, unfortunately, most everybody made pretty much the same mistake -- is we misjudged what economists call the negative tail of the probability distribution of risk. I know that is pretty highfalutin and complex. But it is very critical, because how you made that judgment as to what that tail was, and we had no historic evidence of what it was, was critical that the amount of capital required. We all acknowledge the fact that it was probably what we called a fat tail, which meant there was more risk than usual. What we did not recognize is that it was really obese. WOODRUFF: You embraced the tax cuts of former President Bush, George W. Bush, in 2001, with the caveat that this hinged on keeping the deficit under control. In retrospect, do you wish that you would have spoken out any louder as it became clear that that deficit was growing? GREENSPAN: Well, I thought I did. In fact, there are all sorts of hearings. I remember conversations between Barney Frank and myself, where he was saying, in a sense that, do I understand you essentially saying that effectively unless the second tranche of the tax cut -- which was then occurring in the context of deficits -- was adjusted by pay-go -- meaning financed -- that you would not support it. And the answer was I would not support it. And I did not support it. The trouble is, there is a very selective reading of history out there. I mean, I find it unfortunate, but there are a lot of things that happened which I discussed in great detail and it sort of is -- my main concern myself is the fact that we ought to go back and look at the records. You know, for example, the Federal Reserve has been accused of being lacking in regulation of subprime mortgages. That is actually not accurate. We did everything that Congress requested us to do, because we had very little discretion in the regulatory area. So the Fed is being tarred as being lax in the subprime area, where in effect we were doing everything that Congress was asking us to do. WOODRUFF: On those tax cuts, they are due to expire at the end of this year. Should they be extended? What should Congress do? GREENSPAN: I should say they should follow the law and let them lapse. WOODRUFF: Meaning what happens? GREENSPAN: Taxes go up. The problem is, unless we start to come to grips with this long-term outlook, we are going to have major problems. I think we misunderstand the momentum of this deficit going forward. This argument of stimulus versus non-stimulus, in my judgment, is not a critical issue, in one sense. We are going to be doing very well if we can keep the deficit to where we are now projecting it. The notion that we are somehow going to bring it in far more sharply is just utterly, politically unrealistic. So it is not a question, do you have more stimulus now or do you have basically a significant contraction in the deficit? We are going to have continued expansion in government spending and increasing debt, because there is no evidence that we are closing the debt -- the gap between receipts and expenditures yet. And it is going to be very tough to go up against the momentum that is currently going on. WOODRUFF: So to those interests who say but wait a minute, if you let these taxes go my taxes go up, it is going to depress growth? GREENSPAN: Yes, it probably will, but I think we have no choice in doing that, because we have to recognize there are no solutions which are optimum. These are choices between bad and worse. WOODRUFF: You and Paul Volcker -- the two men probably most associated with the Federal Reserve, the central bank in this country -- seem to have vastly different views now on Wall Street, the banking industry, financial regulation, the economy. Has one of you changed or has this always -- GREENSPAN: Oh, no, I think we are sticking to our basic long-term positions. I would disagree with much of what Paul Volcker is saying, but you have to understand that if you take the whole array of bankers and central bankers, you will find we are a largely independent lot and the coming together on all issues is unlikely. And I would say that in many respects -- I would say that the vast majority of issues, I say we probably agree -- we agree. WOODRUFF: Democrats like Larry Summers, Tim Geithner, Paul Volcker; Republicans like Henry Paulson, current bank regulators like Sheila Bair - all seem to have a more favorable view of financial regulation. Is Alan Greenspan the outlier here? GREENSPAN: Partly, but not wholly. I mean, I have changed my view. In other words, I have essentially argued, as indeed the vast majority of people in the financial sector are arguing, that counterparty surveillance, meaning the individual financial institutions, would have a far better understanding of what the risks are in lending than the regulators. You have to remember, regulators cannot do all that much beyond what is done with the internal auditors of banks, the outside auditors. We bring to bear a broad issue. Now, what has in fact turned out to be the case is, that fundamental premise has turned out to be wrong. You cannot, and we were not able to, do that, and one of the reasons is we had inadequate capital. So does that mean we have to change? Yes, we do have to change. And I am in favor of change. It is just the question, I want to make sure that the change makes sense, addresses the problems that really exist and not those which are fantasy. WOODRUFF: I gather you do not think about this a great deal, but how do you think the events of the last few years will change or shape the Greenspan legacy? GREENSPAN: Well, most -- I think other people worry about that more than I. That is not something over which I have particular control. And the fact of the matter is, I just go on doing what I am doing, say what I think is correct. I will be wrong a significant amount of the time because I am a professional forecaster. If we get it right in forecasting where the economy is going, or where the markets are going, better than 50 percent of the time, we are doing very well. And I do very well. I have done very well since I have been in this business, for over 60 years. So there were ups and downs. There were adulation that I was given years back which I did not deserve. There is criticism I am getting today which I do not deserve. So it balances out. WOODRUFF: Doctor Alan Greenspan, we are delighted to have you as a guest. Thank you very much.
The Gaurdian Member	Sun Jul 18 11:24:22 He is a Socialist.
Adolf Hitler Member	Sun Jul 18 11:28:39 "GREENSPAN: It will be lower, but not all that much lower. The strange fact about this is that what has kept the -- part of the reason why the unemployment rate has stayed high, as the economy has come back, is there was an extraordinary amount of squeeze going on in the corporate sector having as is invariably the case a major expansion of output. They were not looking at their cost structure. They are now, and they squeezed it down to the point where probably it cannot go much lower." So unemployment remains high because corporations are sticking to low productivity backbone staffs even as production increases?
Adolf Hitler Member	Sun Jul 18 11:35:49 GREENSPAN: We are in a state of years -- a decade -- of major increases in federal spending and major tax cuts, none of which other than with borrowed money. Bush=Greece
eds Member	Sun Jul 18 14:27:11 ZOMG ECONOMIC COLLAPSE !!!!!!!!!!!!!!!!!!!!!! http://www...-states-economic-collapse.html
garyd Member	Sun Jul 18 15:28:38 By that thinking Obama equals the former soviet Union.
garyd Member	Sun Jul 18 15:31:37 By the way stating the obvious doesn't make anyone a traitor. He is not however bothering to state why businesses are cutting back on production staffing and have pared it down as low as it can go. For that you blame Mr. Obama's, Mr. Reid's and Ms. Pelosi's policies which will drastically increase the cost of labor and production over the next few years if the last two aren't removed from policy making positions in the next election.
Adolf Hitler Member	Sun Jul 18 15:35:50 Dumdumdum, what do you think about this little gem? "WOODRUFF: On those tax cuts, they are due to expire at the end of this year. Should they be extended? What should Congress do? GREENSPAN: I should say they should follow the law and let them lapse. WOODRUFF: Meaning what happens? GREENSPAN: Taxes go up. The problem is, unless we start to come to grips with this long-term outlook, we are going to have major problems. I think we misunderstand the momentum of this deficit going forward."
Ninja Member	Sun Jul 18 15:38:05 "For that you blame Mr. Obama's, Mr. Reid's and Ms. Pelosi's policies" No, for that we can blame the politicians that got us into this financial mess. You can hardly blame that on two years.
garyd Member	Sun Jul 18 15:38:06 By the way his solution won't work. Reducing the economy further won't raise more taxes just increase expenditures and inflation which the fed will then try to fight by inceasing interest rates there by almost certainly pushing us into another in what promnises to be another roller coaster of stagnation and recession much like we had during the Great Depression. And much like Japan had in the 90's
Adolf Hitler Member	Sun Jul 18 15:45:03 Gduh - "By the way his solution won't work. Reducing the economydriveldroolgurgle" Hmmm, who to believe when it comes to political economics, alan greenspan or gduh the monkey boy. Hmmm, thats a tough one.
garyd Member	Sun Jul 18 15:51:45 Nice to see you knowledge of ecomomis is as limited now as it's ever been. Greenspan is projecting thatincreased taxes on everyone - and please note that the people who will get hurt worst by this are the taxpayers on the bottom who will receive a fifty percent tax increase which will hurt them drastically more than that three percent increase the rich will get.
Adolf Hitler Member	Sun Jul 18 15:52:35 " Greenspan is projecting thatincreased taxes on everyone " In English?
garyd Member	Sun Jul 18 15:55:58 Put a space after the second 't' in 'thatincreased' Idiot.
Adolf Hitler Member	Sun Jul 18 15:58:38 It still doesn't make sense, drivelling redneck. English please?
garyd Member	Sun Jul 18 16:03:39 sorry left off the ending in my unseemly haste. replace the '.' after 'get' with a '-' and add 'will have no negative economic impact of it's own.'
Adolf Hitler Member	Sun Jul 18 16:05:24 Put a space after the second 't' in 'thatincreased' replace the '.' after 'get' with a '-' and add 'will have no negative economic impact of it's own.' Wtf, is this what one has to do to decipher your gibberish because you're too stupid to write coherently? Fuck off.
Adolf Hitler Member	Sun Jul 18 16:07:52 It makes even LESS sense that way, you fucking drooling, drivelling, drooling redneck jesus christ rofl
garyd Member	Sun Jul 18 16:20:35 So you are say that the statement, leaving out what's between the hyphens, that 'Greenspan is projecting that increased taxes on everyone will have no negative economic consequences of their own' makes no sense. Either you are an idiot, or hyphenations or parentheticals confuse you no end, in which case you are still and idiot.
Adolf Hitler Member	Sun Jul 18 16:23:56 "Greenspan is projecting that increased taxes on everyone will have no negative economic consequences of their own" Finally. Whew, what a slog trying to communicate with a lower species..."Put a space after the second 't' in 'thatincreased' replace the '.' after 'get' with a '-' and add 'will have no negative economic impact of it's own.' " Lol, classic. Care to quote the relevant paragraph?
cloud strife Member	Sun Jul 18 18:02:34 Can we also lower government expenditures when we raise taxes? Maybe? A little bit?
Hot Rod Member	Sun Jul 18 18:04:52 If we raise taxes that means we are in a better position to borrow more money that we can spend on useless government programs.
Adolf Hitler Member	Sun Jul 18 18:13:08 Greenspans a socialist, right Hot Lunatic? He says the USA should raise taxes after all.
Hot Rod Member	Sun Jul 18 18:15:22 He used to be a devotee of Ayn Rand, Lord knows what happened to him. I guess he lost his mind.
Who Shot H.R. Member	Sun Jul 18 18:28:57 Yeah, that's what happened. So glad our top up economists, a welfare clinching pedophile, and mr. Book of genesis, are here to say how greenspan is wrong with what he is saying.
Adolf Hitler Member	Sun Jul 18 18:32:20 "He used to be a devotee of Ayn Rand, Lord knows what happened to him. I guess he lost his mind. " Now, who to believe; on the one hand Alan Greenspan, on the other hand, Hot Liar + gduh saying he's completely wrong...oh, decisions, decisions...
Seb Member	Sun Jul 18 18:33:35 "He used to be a devotee of Ayn Rand, Lord knows what happened to him. I guess he lost his mind." Yes, I think he must have done. But it looks like he found it again.
Hot Rod Member	Sun Jul 18 18:34:17 Maybe this will help, he has admitted his share of the blame in causing our current economic disaster. IIRC.
Who Shot H.R. Member	Sun Jul 18 18:36:50 Hence why he was saying let the tax cuts expire? Oh no, a person of such integrity, knowledge, and expertise admitting that he too is prone to mistakes. What a travesty.
Adolf Hitler Member	Sun Jul 18 18:39:25 No matter what happens kids, whenever you meet people like HR + gduh agreeing, put everything you own on the exact opposite, if you want to survive.
Asgard Member	Sun Jul 18 19:32:50 "GREENSPAN: We are in a state of years -- a decade -- of major increases in federal spending and major tax cuts, none of which other than with borrowed money. Bush=Greece" He is jewish you know - why do you believe what he says? it's ZIONAZI propaganda most likely.
Adolf Hitler Member	Mon Jul 19 00:47:43 Huh? I dont give a fuck about ethnicity, kyke.
Hot Rod Member	Mon Jul 19 07:06:15 All AH cares about is how big his dick is. The bigger the better.
Hot Rod Member	Mon Jul 19 10:10:50 You are self-employed or the owner of a small business living a state with an income tax whose family taxable income is above $250,0000.00 You are now aware that the Federal Government plans to raise your income tax rate and impose the social secuity tax on all taxable income above $250,000.000. Coupled with the state income tax your effective tax rate will be 62% on every dollar above $250,000.00 as a result you will: a) Do everything possible to keep your taxable income below $250,000.00 and consider joining the underground economy (cash or barter) or moving to a non-income tax state. b) Cheerfully do your "patriotic duty" and be happy to keep 38% of what you earn before including any other taxes you might pay. Next question, how many jobs can each company offer if the tax rate does not change?
Adolf Hitler Member	Mon Jul 19 10:12:24 Your crawlspace does not qualify as a small business with an income tax above $250,0000.00. Next?
Adolf Hitler Member	Mon Jul 19 10:13:12 Btw, "$250,0000.00." Huh?
jergul Member	Mon Jul 19 12:00:29 Taxable income above 250 000? Gross income minus deductions you know. What % of US households have a taxable income above 250 000 USD?
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