[PEN-L:30642] debunking greenspan redux or, finance as bubble gum and duct tape

["Ian Murray" <seamus2001@xxxxxxxxx>]

Credit Bubble Bulletin, by Doug Noland
The Trials and Tribulations of Speculative Finance
September 27, 2002
full piece at:
http://www.prudentbear.com

[snip]

That Greenspan would this week comment that outsized risk premiums "suggest"
the "potential for a far larger world financial system" suggests that he has
conveniently sunk to a new low in economic analysis (and that he is
deluded).  This key issue goes all the way back to the John Law's Great
fallacy:  that economic wealth can be created simply by providing additional
money ("finance").  And in reasoning that either lacks credibility or
understanding, Greenspan would like us to believe we can have our cake and
eat it too - that more beneficial "finance" can be created that leads to
more "wealth" and higher living standards, as long as it is "managed ever
more effectively."  This recalls his dangerously uninformed analysis that
that SE Asian crisis was caused by "unhedged" holdings.


[snip