Get rid of Alan Greenspace and the Fed?

Discussion in 'Economics' started by The Kin, May 11, 2005.

  1. Retired

    Retired

    Greenspan to grads: I need a job, too

    http://money.cnn.com/2005/05/15/news/economy/fed_greenspan.reut/index.htm

    Fed Chairman tells Penn business school that technology diminishing corporate leaders' power.

    May 15, 2005: 2:11 PM EDT

    WASHINGTON (Reuters) - Federal Reserve Board Chairman Alan Greenspan on Sunday gave business school graduates a taste of the sharp-elbowed workplace ahead: they will have to compete with him for a job.

    "I have more in common with you graduates than people might think," he said in the commencement address to the University of Pennsylvania's Wharton School in Philadelphia. "After all, before long, after my term at the Federal Reserve comes to an end, I too will be looking for a job."

    The Federal Reserve released a text of Greenspan's speech in Washington.

    The 79-year-old central bank chairman must step down early next year when his term on the central bank's board expires at the end of January.

    Lest the newly minted MBAs think their youth gives them an advantage over Greenspan, the Wall Street Journal reported Friday that the Fed chairman has become more fit recently by playing more singles tennis and has lost 20 pounds as a result.

    Greenspan reminded students -- and anyone else paying attention -- that his resume is likely to be a lot longer than theirs.

    "I could offer all kinds of advice to today's graduates from my nearly six decades in private business and government," he said.

    Greenspan told graduates that modern technology makes company information more widely available and that corporate captains face diminished power and closer scrutiny as a result.

    "With information systems now accessible to broader ranges of managers and other employees, the monopoly power that proprietary information affords has been significantly reduced," he said.

    Click here for more about Greenspan's current job.
     
    #21     May 15, 2005
  2. Ditto. Agreed. Quoting myself to save bandwidth.

    http://www.elitetrader.com/vb/showthread.php?s=&postid=719592#post719592
     
    #22     May 15, 2005
  3. The funniest thing in the world is that if businesses did what the fed does, they would be closed down and arrested....think about it?

    Your trading on margin with a ridiculously low rate of say 2%....you take out a huge amount of leverage and borrow more and more due to easy access to funds and then...POOF!....the firm raises your rate to 12%, increases the amount of required equity to 50% and your left with huge potential losses and do not know what to do.....its basically the typical credit card scam....10,000 line of credit at 0%......for six months.....then they whack you up to 18%....isn't this what the fed is essentially doing on a more subtle level?
     
    #23     May 16, 2005
  4. Excellent Commentary

    It certainly can be argued that no one is policing the police....

    For example....

    The recent chief of the SEC has just quit and is going back into the Corporate sector....He and his staff have created over 6 billion in fines much of which did not go to the harmed individuals...but some of which went to his cronies...which is not hurting his job prospects...This does not include the loss of thousands of jobs...higher consumer prices...and billions in lost equity...

    Spitzer has dramatically increased his net worth...and will continue to do so in a similar fashion...

    Basically no one wants the lower local and national government pay...and has always fully intended to use the government side as a lever to the big dollars....

    Oh yeah..this is a huge conflict of interest...which at the moment has no solution....

    The solution is simple....these guys can chase the individuals who commit the wrong doing...not the companies..

    But guess what...it will never happen because there is no money in it...chasing individuals...
     
    #24     May 16, 2005
  5. Someone pointed out that the 19th century was a time of much greater economic fluctuation and I agree with that but as traders, is that a bad thing?

    Ok, I would say it is not but the reason is that the fluctuations were much less severe. The Great Depression was great because it produced an unemplyment rate that was unheard of before in the mighty engine of capitalism. Can anyone here imagine unemplyment rates above 20% and the kind of social chaos that would produce? I am going to make a big assumption for which I am sure many of you do not agree but I think the Great Depression was caused by the Fed and exacerbated by the social programs FDR instituted. The twenties eclipsed previous bull markets and the thirties was a much larger fall. If you do accept this at least in part you might also recognize that the inflation of the late 60's and 70's was Fed induced. And, of course, we are living inside what i think will be a bubble that dwarfs them all save Jahn Law's.

    (Skipping the argument about causes lets me get straight to the solution)

    The 19th century was a time...sorry, I thought I was in high school writing a paper...when money was metal and private. I have the notes in safety deposit box given to me by my grandfather. I think the best solution is for the government to set a standard for money and let private companies supply what is necessary to the public. It would not be a gold standard but a commodity standard, a basket of commodities which the company had to present to the bearer of their notes. (We can argue about amounts and the timing of payments another time)

    The Fed would have a role as inspector of the books, although I think the books should be open to the public. The Fed might even keep producing currency but it would be subject to Gresham's Law which would be just fine. What we desire from our currency which we are not getting is a store of value. Who says an economy needs one currency?

    PS I hate Alan Greenspan. The biggest problem I have with him is the idea of having a 'plunge protection team' to support the stock market. And don't you think the dirt bags at Goldman front ran that F***ing order!?! Secondly, I got caught by his little trick of cutting rates right before the markets closed. I think it was 1996. WHat a SOB! He did that to screw traders so that we would be scrambling to cover shorts at much higher prices.
     
    #25     May 16, 2005
  6. Have you read any other historian as good as Quigley?

    I was amazed at the amount of information this guy processed, and put down in coherent constructs, which considered the economies involved, and the extent of his research.

    After reading 3-4 pages, I had to take a rest to digest his theories...

    Great reading.
     
    #26     May 16, 2005
  7. I wonder if the fed really does buy any bonds to boost interest rates or by Greenspan simply decreeing that they will raise rates, the market does the job for them? Thank about it.

    I also wonder if this whole thing is just a game. The gov issues a shit loads of debt at low rates, then the fed raises rates and rebuys the depressed bonds. Since the fed is a government enitity, a significant amount of interest payments would be saved. Then again, that would not explain why the government no longer issues the 30 year bond.
     
    #27     May 16, 2005
  8. Nope... no american historians who I like as much... figured we read the same guy.

    Still intrigued by that dedication, however.

    Where is harrytrader when you need him?
     
    #28     May 16, 2005
  9. I'm not an expert, but, the Fed use the discount rate, Fed rate and the level of reserves to play the game.

    The rates reduction allow any bank to get a loan from the Fed at the lower rates, hence, lowering all rates.

    Every dollar reduced from the reserve requirement of a bank has a 9x multiplying effect on the reserves to money a bank can lend.

    If the Fed did that, buy back their bonds, they would be recovering from the bad deal of lending at low rates...

    BTW, the Fed have announced that they will reissue the 30 yr bond. Should make short term bonds drop (less demand) and long term too (more supply).
     
    #29     May 17, 2005
  10. ***If the Fed did that, buy back their bonds, they would be recovering from the bad deal of lending at low rates...***


    What was I thinking. No, that's not the way it is.

    You're right, it is a hell of a deal for the Fed, and a very bad one for the bond holder. Chinese, japanese, et al...
     
    #30     May 17, 2005