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Reply #17: As Economy Thrived Under Greenspan, So Did Debt [View All]

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54anickel Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jan-23-06 07:59 AM
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17. As Economy Thrived Under Greenspan, So Did Debt
Edited on Mon Jan-23-06 08:24 AM by 54anickel
Imbalances Make Federal Reserve Chairman's Legacy Unclear


"The jury is out on his legacy in large part because of the debt" and the trade deficit, said Stephen S. Roach, chief economist at Morgan Stanley. "You will not be able to truly judge his accomplishments until we see how this plays out in the post-Greenspan era."

Creating Debt

Greenspan and his Fed colleagues agree that part of the growth in household debt and the trade gap is the side effect of policies that helped steady the U.S. economy after the stock bubble burst in 2000. The Fed's low interest rates encouraged consumers to borrow and spend on houses, autos and other goods, spurring economic growth for several years when businesses were cutting jobs and reluctant to invest. And it was no surprise that consumers spent much of their borrowed money on imports, causing the trade deficit to swell. But in the view of central bank policymakers, the alternative would have been worse -- a longer and more painful downturn.

Greenspan's Fed didn't do it alone, economists agree. Other factors helped fuel the borrowing binge, including global financial trends that have helped keep mortgage rates low and prompted lenders to extend more credit to more people.

The result is a prosperity built on borrowing, say many economists, pointing to a string of recent records and firsts:


The Fed chairman told Congress in June: "I think we've learned very early on in economic history that debt in modest quantities does enhance the rate of growth of an economy and does create higher standards of living, but in excess, creates very serious problems."

Greenspan didn't define "excess," but economists see troubling possibilities: A sudden reversal in housing prices could trigger a recession if consumers cut back on spending and households have trouble paying their mortgages. The trade gap could swell to a point that forces a sharp fall in the dollar and surge in interest rates, also causing a recession.


Now look at them yo-yo's, that's the way you do it
You play the market like on CNBC
That ain't workin', that's the way you do it
Money for nothin' and your chicks for free
Now that ain't workin', that's the way you do it
Lemme tell ya, them guys ain't dumb
Maybe get a blister on your little finger
Maybe get a blister on your thumb

We got to install microwave ovens
Custom kitchen deliveries
We got to move these refrigerators
We got to move these color TV's


I shoulda learned to play on margin
I shoulda borrowed against my home
Look at that mama, she got it stickin' in the camera
Man we could have some
And he's up there, what's that, credit derivatives?
Bangin' out the dollars like Bernanakeeeee
Oh, that ain't workin' that's the way you do it
Get your money for nothin' get your chicks for free

Now that ain't workin' that's the way you do it
You play the market like CNBC
That ain't workin' that's the way you do it
Money for nothin' and your chicks for free

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  -STOCK MARKET WATCH, Monday 23 January ozymandius  Jan-23-06 05:02 AM   #0 
  - WrapUp by Tim W. Wood  ozymandius   Jan-23-06 05:08 AM   #1 
  - One report today  ozymandius   Jan-23-06 05:10 AM   #2 
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  - Oil flat after topping $69, supply fears multiply  ozymandius   Jan-23-06 05:14 AM   #3 
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  - Iran Sanctions Could Drive Oil Past $100  54anickel   Jan-23-06 08:33 AM   #29 
  - Since 1960, four and only four mbd fields have been discovered  hatrack   Jan-23-06 08:39 AM   #31 
  - Average gas price rises to $2.33 per gallon  UpInArms   Jan-23-06 08:27 AM   #27 
  - March Crude @ $68.15 bbl - Feb NatGas @ $8.335 mln btus  UpInArms   Jan-23-06 09:17 AM   #50 
  - Saudi King Signs Energy Deal With China  UpInArms   Jan-23-06 10:12 AM   #68 
  - Tectonic plates shifting... n/t  EuroObserver   Jan-23-06 10:23 AM   #74 
  - Heh-heh...  54anickel   Jan-23-06 10:47 AM   #81 
     - He, heh...She said "Dicktater"..heh,  mojavekid   Jan-23-06 03:16 PM   #129 
        - Hi Mojavekid!  54anickel   Jan-23-06 05:41 PM   #134 
  - March Crude @ $68 bbl - Feb NatGas @ $8.50 mln btus  UpInArms   Jan-23-06 10:54 AM   #84 
  - March Crude closes @ $68.10 bbl - Feb NatGas @ $8.574 mln btus  UpInArms   Jan-23-06 01:59 PM   #119 
  - Countdown To Energy War (Willie)  54anickel   Jan-23-06 03:44 PM   #131 
  - Nikkei falls 2 pct on US slide, dollar weakness  ozymandius   Jan-23-06 05:18 AM   #4 
  - Tokyo increasingly defensive  EuroObserver   Jan-23-06 06:22 AM   #5 
     - Livedoor CEO arrested  EuroObserver   Jan-23-06 06:23 AM   #6 
     - Japanese economy improving - BOJ  EuroObserver   Jan-23-06 06:24 AM   #7 
     - On Yamaha's unmanned helicopters  EuroObserver   Jan-23-06 09:55 AM   #65 
        - So why the big deal now? China first got this in 2002, if not earlier.  54anickel   Jan-23-06 10:14 AM   #70 
           - Looks odd. Kneejerking or do they think they know something?  EuroObserver   Jan-23-06 10:38 AM   #80 
              - That's what I was thinking - US pressure. Has there been renewed  54anickel   Jan-23-06 11:05 AM   #86 
                 - Nothing European embargo-related that I've heard of  EuroObserver   Jan-23-06 01:25 PM   #116 
                    - It's odd. Remember all the "fear China" mongering last summer -  54anickel   Jan-23-06 01:54 PM   #118 
  - European stocks drop  EuroObserver   Jan-23-06 06:27 AM   #8 
  - Dollar slides 1.15%  EuroObserver   Jan-23-06 06:28 AM   #9 
  - Dollar at four-month low against Swiss franc  EuroObserver   Jan-23-06 07:50 AM   #13 
  - It is particularly curious how this daisy chain works, eh?  ozymandius   Jan-23-06 07:32 AM   #11 
  - I sense increasing irrationality  EuroObserver   Jan-23-06 07:57 AM   #15 
  - Morning Marketeers,  AnneD   Jan-23-06 08:49 AM   #36 
  - Latest FT report spins London "following" Wall Street  EuroObserver   Jan-23-06 11:17 AM   #89 
  - Europe: Markets hold breath  EuroObserver   Jan-23-06 07:43 AM   #12 
     - Europe closing: some damage  EuroObserver   Jan-23-06 10:58 AM   #85 
  - Bo Diedle launches investigation into Citicorp re: $ to Saudi royal/terror  wordpix2   Jan-23-06 07:04 AM   #10 
  - Wolfowitz  TheGunslinger   Jan-23-06 07:53 AM   #14 
     - pls. explain about Wolf  wordpix   Jan-23-06 09:59 AM   #66 
        - He worked there along with...  TheGunslinger   Jan-23-06 12:22 PM   #108 
  - pre-open blather  ozymandius   Jan-23-06 07:58 AM   #16 
  - As Economy Thrived Under Greenspan, So Did Debt  54anickel   Jan-23-06 07:59 AM   #17 
  - Oh yeah, remember when Greenspin refused to raise margin  54anickel   Jan-23-06 09:09 AM   #43 
  - Hey 54anickel,  AnneD   Jan-23-06 09:15 AM   #48 
  - Howzbout -  54anickel   Jan-23-06 09:21 AM   #54 
     - Oh Yahhh  AnneD   Jan-23-06 09:29 AM   #56 
  - For one in 53 American households, it may already be too late  54anickel   Jan-23-06 09:59 AM   #67 
  - I, Greenspan (Bonner)  54anickel   Jan-23-06 11:15 AM   #88 
  - Poof - 25% Underwater Overnight  54anickel   Jan-23-06 11:25 AM   #91 
     - The only thing worse than being upside down in a loan...  AnneD   Jan-23-06 02:21 PM   #124 
  - daily dollar watch  UpInArms   Jan-23-06 08:03 AM   #18 
  - Swiss Bank UBS Halts Iran, Syria Business  54anickel   Jan-23-06 09:20 AM   #52 
  - Sterling rises to three-mth high vs a weak dollar  EuroObserver   Jan-23-06 10:21 AM   #73 
  - Dollar lower after Fed, ECB speeches  UpInArms   Jan-23-06 10:23 AM   #75 
  - A Double Whammy for the Dollar!  54anickel   Jan-23-06 12:01 PM   #102 
  - OMG! The Great Mogambo has keyboard-banging company!  UpInArms   Jan-23-06 12:11 PM   #106 
     - Yeah, but Mogambo's much better looking! And he plays a mean  54anickel   Jan-23-06 12:26 PM   #111 
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  - Avarice will be their undoing.  ozymandius   Jan-23-06 08:08 AM   #21 
  - Looks like Ameriquest is getting slapped for their avarice  UpInArms   Jan-23-06 08:18 AM   #24 
     - Ameriquest to pay $325 mln in lending settlement  UpInArms   Jan-23-06 12:37 PM   #113 
  - Again...  AnneD   Jan-23-06 09:20 AM   #51 
  - I am uncomfortably accustomed to seeing stories like this one.  ozymandius   Jan-23-06 08:06 AM   #20 
  - this also perpetuates the myth that losses are the fault of  UpInArms   Jan-23-06 08:20 AM   #25 
     - Well, labor is such a pain in the arse. I mean come on, the audacity  54anickel   Jan-23-06 08:44 AM   #33 
        - I TA with your posts Ozy, UIA, and 54anickel....  AnneD   Jan-23-06 09:27 AM   #55 
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  - Treasurys fall in early trade; supply issue in focus  UpInArms   Jan-23-06 08:17 AM   #23 
  - Printing Press Report:Fed adds reserves via overnight system repurchases  UpInArms   Jan-23-06 08:44 AM   #32 
  - US Treasuries move down, weighed by coming supply  UpInArms   Jan-23-06 08:46 AM   #34 
  - Oh yeah, I said it before - they'll flood the market to drive down prices  54anickel   Jan-23-06 09:29 AM   #57 
     - $100 Billion in next 30 days  UpInArms   Jan-23-06 10:19 AM   #72 
        - WTF, herd foreign CBs into GSEs like Freddie and Fannie while  54anickel   Jan-23-06 10:34 AM   #79 
  - US c/a gap poses risk to growth-Fed's Geithner  UpInArms   Jan-23-06 09:08 AM   #42 
  - Printing Press Alert: Fed buying coupons, adding permanent reserves  UpInArms   Jan-23-06 09:50 AM   #63 
  - U.S. Treasuries fall as upcoming issuance weighs  UpInArms   Jan-23-06 11:31 AM   #94 
  - Treasurys finish off their lows  54anickel   Jan-23-06 03:14 PM   #128 
  - It appears that Ford's increase was due to selling off the family silver  UpInArms   Jan-23-06 08:30 AM   #28 
  - Ford will cut 25,000 to 30,000 jobs  UpInArms   Jan-23-06 09:37 AM   #59 
  - Taxpayers missing out on latest energy bonanza  UpInArms   Jan-23-06 08:34 AM   #30 
  - this is what happens when energy corps make gov policy with Dickhead  wordpix   Jan-23-06 10:26 AM   #77 
  - 9:46 EST wheels turning in the land of lala  UpInArms   Jan-23-06 08:47 AM   #35 
  - Bargain buying! WHEEEE!!!!!  Roland99   Jan-23-06 08:50 AM   #38 
  - Reversing course?  Roland99   Jan-23-06 09:07 AM   #41 
     - 10:10 EST bouncing around  UpInArms   Jan-23-06 09:12 AM   #47 
        - Ford's up on a fluke (sale of Hertz)...Can't imagine that bounce will last  Roland99   Jan-23-06 09:17 AM   #49 
  - Feb Gold @ $558.70 oz  UpInArms   Jan-23-06 08:50 AM   #37 
  - J.P. Morgan sees gold near $600/oz by year-end  EuroObserver   Jan-23-06 11:06 AM   #87 
  - Seems strange to have this coming from JP Morgan. Makes me wanna  54anickel   Jan-23-06 02:01 PM   #120 
  - By Year End?  OrangeCountyDemocrat   Jan-23-06 04:39 PM   #133 
  - Gold lease trends  Danascot   Jan-23-06 07:00 PM   #136 
  - Gold futures close up on weaker dollar - $558.70 oz  UpInArms   Jan-23-06 01:45 PM   #117 
  - Albertson's Finds Buyers  rainbow4321   Jan-23-06 08:53 AM   #39 
  - IMF's Rajan says U.S. must cut fiscal deficit (raise taxes)  UpInArms   Jan-23-06 09:09 AM   #44 
  - And Booosh's answer..."STFU, it's China's fault"  54anickel   Jan-23-06 05:48 PM   #135 
  - markets not making any friends this morning  ozymandius   Jan-23-06 09:10 AM   #45 
  - Nasdaq turns red  oioioi   Jan-23-06 09:10 AM   #46 
  - Intel and Cisco are taking a beating.  Roland99   Jan-23-06 09:21 AM   #53 
  - Ford making announcement now  Roland99   Jan-23-06 09:35 AM   #58 
  - 25,000 to 30,000 jobs to be cut  UpInArms   Jan-23-06 09:39 AM   #61 
  - Ford closing 14 plants  UpInArms   Jan-23-06 09:42 AM   #62 
  - Ford to cut up to 30K staff, 26% production in restructuring  UpInArms   Jan-23-06 09:54 AM   #64 
  - China to build 3G network with own technology  54anickel   Jan-23-06 09:37 AM   #60 
  - The US current-account deficit is a figment of bad accounting. If only.  EuroObserver   Jan-23-06 10:13 AM   #69 
  - OMG! I don't know where to begin...  54anickel   Jan-23-06 10:25 AM   #76 
     - Yeah, like GM and Delphia executives. n/t  fasttense   Jan-23-06 12:07 PM   #104 
  - Pilgrim's Pride 1Q earns decline  UpInArms   Jan-23-06 10:27 AM   #78 
  - Bush bribe links denied  UpInArms   Jan-23-06 10:48 AM   #82 
  - Japan pushes US for explanation on beef (long ban expected)  UpInArms   Jan-23-06 10:52 AM   #83 
  - It's a Japanese domestic problem also.  EuroObserver   Jan-23-06 11:33 AM   #95 
  - Kicked, and recommended for 'Greatest' page. n/t  Lori Price CLG   Jan-23-06 11:22 AM   #90 
  - Hiya Lori!  UpInArms   Jan-23-06 11:29 AM   #93 
  - Senators enjoy unusual market "luck"  UpInArms   Jan-23-06 11:26 AM   #92 
  - Game's rigged and the gig ain't up. Time to take the remaining chips home.  54anickel   Jan-23-06 11:39 AM   #97 
     - that luck must come...  AnneD   Jan-23-06 12:01 PM   #103 
  - 12:32 EST numbers and blather  UpInArms   Jan-23-06 11:33 AM   #96 
  - Not getting any better  JNelson6563   Jan-23-06 11:44 AM   #98 
     - 12:48 EST losing steam rapidly  UpInArms   Jan-23-06 11:50 AM   #100 
  - ARG POLL: 62% say economy will be worse a year from now!  UpInArms   Jan-23-06 11:47 AM   #99 
  - And the SOTU address will set out to show just how wrong those  54anickel   Jan-23-06 11:56 AM   #101 
     - I wish that during the SOTU speech...  AnneD   Jan-23-06 12:12 PM   #107 
  - American contractors leaving Iraq  54anickel   Jan-23-06 12:08 PM   #105 
  - UNDERSTANDING INFLATION, DEFLATION  54anickel   Jan-23-06 12:23 PM   #109 
  - potential for a negative effect on public confidence in our markets  UpInArms   Jan-23-06 12:24 PM   #110 
  - American Express earnings fall 17%  UpInArms   Jan-23-06 12:39 PM   #114 
  - Fark- Privately-minted $20 "Liberty" coins  Sven77   Jan-23-06 01:04 PM   #115 
  - First time I've heard of someone being arrested for it. Liberties have  54anickel   Jan-23-06 03:25 PM   #130 
  - Liquidity Fire Trap?  54anickel   Jan-23-06 02:05 PM   #121 
  - Bank group wary of (class action) retailer credit card suit  UpInArms   Jan-23-06 02:09 PM   #122 
  - Auto-industry woes may hit banks  UpInArms   Jan-23-06 02:18 PM   #123 
  - new blather  ozymandius   Jan-23-06 02:31 PM   #125 
  - I mean Bullish bias.  54anickel   Jan-23-06 03:04 PM   #127 
  - just before the close.  ozymandius   Jan-23-06 02:48 PM   #126 
  - closing numbers with blather  ozymandius   Jan-23-06 04:14 PM   #132 

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