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Saturday, September 8, 2007



Just read what MoneyNews.com just reported about Greenspan
“Breaking News from MoneyNews.com
1. Greenspan Says Bubble As Bad As ‘98
Alan Greenspan, once the world's top central banker, said on Friday ongoing credit turmoil reminded him of the 1987 and 1998 market crises as data showed U.S. firms cut 4,000 jobs last month, the first fall in four years.
"What we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock market crash of 1987," the Wall Street Journal quoted the former U.S. Federal Reserve Chairman as saying.
Hedge fund Long-Term Capital Management controlled $100 billion of assets in 1998 but collapsed in the wake of a Russian debt crisis, wreaking havoc in many derivatives markets. Greenspan took over as Fed chief shortly before the Dow Jones share dex slumped 23 percent in a day in October 1987. “

Poor old Greenspan! He did not get it right in 1998 and now he is an expert. I have written about Greenspan’s antics before, but he continues to give me fodder to feed to the pigs. He was so absorbed about controlling inflation which, by the way, did not exist at the time in 1998 when he was increasing interest rates to beat the band, that he did not, or better yet could not, see what was about to happen – the collapse of the market bubble. Unfortunately, Bernanke is no better, because they all went to the same school.

The present situation with the so-called sub-prime market collapsing the entire market could have been avoided. More importantly, it might have been corrected in its early stage, and even now, perhaps, can be corrected but time is running out. I have all the faith in the world that Bernanke will fail because he went to the same school as Greenspan.

Infusing more printed money into the system is not the way to do it. The system has the ability to correct the situation in the same way that it created the problem in the first place. I said it here before. Is any one listening?

The problem of the housing market collapse was due to the rapid increasing of the interest rates before the market had sufficient time to adjust. I purchased a sum-prime loan and before I knew it the rates increased so rapidly, I was caught off guard. Fortunately, I have the capital to survive, but many do not.

The correction will occur when the Feds reverse the process by decreasing interest rates. The half percent decrease two weeks ago was nothing more than pissing in the ocean. The reason why the decrease was so low is because they really did not want to do it but felt pressured to do so. With a decrease in interest rates NO money is added to the system; the market can generate the money and the process will be reversed. It is so darn logical it is a wonder why these men at the Fed cannot get it. There are still members of the Fed Board who were calling for an interest rate hike. They should be fired because they are so stupid they are actually dangerous.

One of the problems with the Fed Board is that they have no oversight. Yes, Bernanke has to report to Congress but Congress essentially has no power to force them to act any differently. The Fed Board is essentially autonomous, and this is dangerous. Their performance should be evaluated just as any other individual working in the marketplace. But, it is not.

With today report that jobs in August were decreased by 4000 appeared to shock the market. It did not shock me. Read some of my previous Blogs. I have seen the warning signs and have written about the impending problems Others have also. It is not that I consider myself a genius, or maybe I should take that back, but I know that I know logic for the Jesuits will be proud of me. Some of us have predicted the impending recession of jobs growth, and as usual the Feds are going to miss it as they have all the time that I have been observing them. They always do.

The All Knowing Market is actually quite stupid. Many in the market listen to every word spoken by the people at the Fed. They should instead ignore them for they do not know what they are doing. Greenspan never spoke two words which ten different people would interpret the same. He spoke eloquently about nothing. I remember that quite a number of years ago the AMA invited a speaker who was in reality a comic who spoke in double talk. After his speech he got an astounding ovation. It was then revealed that the speaker was actually a comic and gave a beautiful sounding speech on ABSOLUTELY NOTHING. The point of the whole episode was to prove that most attendees at such a conference do not pay attention to the speakers. Well, we should do the same with the Feds.

I am so sorry I appear so negative on the Feds and their antics but they really give me no choice.

Soon I will write about the Laws of Thermodynamics (i.e., energy) as they relate to market forces. The concepts are quite interesting, if not challenging.

nicola michael c. Tauraso, M.D.


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