One of the annoying little "Urban Legends" going around
is that the economy was in "good shape" before the hurricanes... IT'S WASN'T!
Consider:
Greenspan's HYPER-LIQUIDITY EXPERIMENT to "save the bubble" was causing massive distortions in asset prices...ala the HOUSING BUBBLE. Additionally, by keeping interest rates so low for so long...Greenspan forced people into the stock market or other "assets" just to avoid those .9% yeilds on six month CDs! Remember?
Greenspan's faith in the curative powers of monetary policy has never really been put to the test...or survived an ENTIRE CYCLE of economic activity. Sure, the G-Man "saved the bubble" and allowed his chums in the boardrooms to "float" their underwater stock options from the late 90's. But jobs have suffered mightily in the process.
The "job numbers" are "good" only because of the massive dumbing down that journalism has been required to do during the Dubya Years...
Wages are low in most of the new jobs and indeed, most jobs are either temporary, part time or in "hospitality" industries like restaruants and bars... This is not a formula for long term prosperity.
The role of debt in the economy is also conveniently ignored... Housing refis have been routine...and now CREATIVE MORTGAGES are the dominant form of real estate loans. This will eventually cause a massive crash in the banking sector...which Greenspan will be unable to "protect" with the One Percent Solution this time around.
The trade and budget deficits are also ignored... But for China's generosity the US would be a pauper nation...like in Latin America...high interest rates and massive poverty. And poverty in the US is growing all the time.
And the beat goes on...THIS NOTION THAT THE ECONOMY HAS BEEN "HEALTHY" IS STRICTLY A WALL STREET "URBAN LEGEND" THAT WAS PICKED UP BY THE MAINSTREAM MEDIA.
BUT REMEMBER, REALITY TENDS TO STRIKE ALL AT ONCE...AND THE JOBS NUMBER NEXT WEEK COULD BE THE EVENT THAT PULLS BACK THE CURTAIN ON THE WIZARD OF THE FED AND REVEALS THE HORRID TRUTH ABOUT WHAT THE LAST FEW YEARS HAVE REALLY BEEN ABOUT...ASSET INFLATION AND MORE ASSET INFLATION!
GREENSPAN HAS BEEN RUNNING THE ECONOMY "AS IF" ONLY CAPITAL AND ASSETS MATTERED... HE HAS BEEN BURNING THE CANDLE AT BOTH ENDS TO ACHIEVE THIS DISMAL GOAL, AND NOW THE END IS NEAR... THE PENDULUM IS STARTING TO SWING AGAINS GREENSPAN AND HIS WALL STREET CRONIES NOW...AND NOTHING CAN STOP IT.
