Some really serious stuff on Goldman

Greenspan's Perception 1

I just started reading "The Age of Turbulence" by Alan Greenspan. I only got to page 14 of the introduction when I could not believe what I was reading. He says, and I quote, "The decline of real (inflation-adjusted) long-term interest rates that has occurred in the past two decades has been associated with rising price-to-earnings rations for stocks, real estate and in fact all income-earning assets. The market value of assets worldwide between 1985 and 2006 as a consequence rose at a faster than that of nominal world GDP... This created a Major increase in world liquidity. Stock and bond prices, homes, commercial real estate, paintings, and most everything else joined in the boom. Homeowners in many developed nations were able to dip into their growing home equity to finance purchases beyond what their incomes could finance." and he goes on to glow about the annual rate of growth of the world economy from 2000-2006 of 3.2% per head adding that "Market capitalism, the engine that runs most of the world economy, seems to be doing it's job well."

Now I get it. Greenspan gloats for pages in his introduction, not about the American economy, which in my eyes from 1985-2006 had about 6 years of real growth (from 1994-2000 roughly), with the rest of the period either in recession, stagnation or outright "borrowed money asset inflation" just as he says, with NO REAL UNDERLYING GROWTH OR PROSPERITY, just a wholesale transfer of what wealth there was to the hands of those who orchestrated that transfer, but about the "global economy". It does not matter that we in the US had a serious and deep recession in the early 80's that did irreparable harm to our economy, that this recession was followed by a debt fueled asset bubble not unlike we just experienced that collapsed fantastically in the late 1980's resulting in the near melt-down of the US financial system, followed by a stagnant period of about 5 years with anemic growth (remember "It's the economy stupid" in 1992), declining standards of living, an implosion of our cities with drugs, crime and exodus, and the whole sale moving of our "productive" capacity out of the nation (accompanied with the gutting of the American education system creating a couple generations of useless ignorant graduates who were slaves to carbon and isolated from any means of economic advancement).

Greenspan is a complete globalist. He should be tried and convicted of NOT PERFORMING HIS DUTY AS HEAD OF THE FED ACCORDING TO THE OATH HE TOOK. It is obvious as hell his perceptions are global, not national. What do you do when the guy who runs the Fed in the US runs it as if he is running the "world economy" and makes no attempt to hide the fact that he measures his success at the Fed based on the success of the "world economy" not the US economy.

I get it now, I really get it now. The powerful multinational corporations and the success of their ability to exploit the rest of the planet for their profits is and has for some time WAY trumped the Fed's priorities of real growth, low inflation and full employment in the US. I have known since my undergraduate days at the University of Maryland that some 85% or more of the US "currency" in circulation was outside of the US. Now I understand, when we have a Fed Chairman like Greenspan running the Fed, this is how he sees his role, the US is about 15% of the economy he controls monetary policy over. What ignorant fool would think the Fed cares more than that about the American economy.

If you think I am off base, just read Greenspan's own introduction to his own book. You will get it. I need not say more.

Worthless Consultants and Overpaid Corporate Heads

I have frequently stressed how amazingly incompetent many folks who run major corporations are. Often they are part of a "club" of folks who are offered various posts leading major corporations in various capacities because they are in this "club". I wouldn't mention how one becomes part of this club but obviously it means you have access to the largest pools of money in the nation, corporate profits, cash flows, stock etc. and can rake millions out of the system.

So, occasionally I find an article that demonstrates how these incompetent executives make decisions by hiring consultants to make decisions for them instead of making themselves because well, they are incompetent or they have lawyers that tell them if they can point to a "professional consultant" as the cause of their disastrous decision that will protect them or whatever...

Here is a quote from an FT article I read today:

Citigroup’s disastrous foray into complex securities before the financial crisis was partly based on the recommendation of outside consultants hired to advise the bank’s leaders, a former senior manager revealed.

In testimony on Wednesday to an inquiry into the turmoil, Thomas Maheras, a former co-head of Citi’s investment bank, lifted the lid on a move that led to more than $50bn in losses and forced the US government to bail out the company.

Mr Maheras said that, following a study by a consulting firm – said by people close to the situation to be Oliver Wyman – in 2005, Citi decided to ramp up parts of its fixed income business, including in collateralised debt obligations. Oliver Wyman did not respond to a request for comment.

“Based in part on a careful study from outside consultants hired by our senior-most management, the company decided to expand certain areas of our fixed income business that we believed at the time offered opportunities for long-term growth,” Mr Maheras told the Financial Crisis Inquiry Commission, which was appointed by Congress.

Citi’s decision came when it was led by chief executive Chuck Prince, a lawyer who had served as general counsel and had relatively limited capital markets experience.

Need I say more?