Alan Greenspan himself wrote an essay for
the Financial Times titled "We Will Never Have a
Perfect Model of Risk", which perfectly sums up
the incredible stupidity of this man who used the
Federal Reserve to destroy this country. In his
essay, Greenspan starts out by saying, "The
current financial crisis in the United States is
likely to be judged in retrospect as the most
wrenching since the end of the Second World War."
Wow! Pretty strong stuff from the guy who
created all this mess and denied all along that
anything could happen to the economy that lowering
interest rates couldn't handle!
Then,
amazingly, he puffs up his chest and says that
today's sophisticated computer modeling by him and
his buddies requires "that saving equal
investment, that the marginal propensity
to
consume be
positive, and that inventories be non-negative".
My Rebellious Mogambo Mind (RMM) naturally
says, "Huh? What in the hell is THAT supposed to
mean?" and my Slobbery Mogambo Lips (SML) say,
"Huh? When in the hell was the last time that
saving equaled investment? When in the hell was
the last time that someone did not spend a part of
every new dollar of income? And just what in the
living hell is a negative inventory?"
He
does not answer me, but bizarrely goes on to say
that "these restraints, among others, eliminated
most of the distressing inconsistencies of the
unsophisticated forecasting world of a half
century ago". Hahahaha! I can't believe I am
reading this! Hahahaha! We are going to have the
worst financial crisis for the last half century,
which has completely surprised him and his little
forecasting buddies, even though he crows about
how he "eliminated most of the distressing
inconsistencies of the unsophisticated forecasting
world of a half century ago". Hahaha!
Things are so screwed up that even he
asks, "How did we go so wrong?", which seems to me
to be an indicator of failure, like when I get to
work a few lousy minutes late one lousy day, and
my stupid boss angrily tells me "I was so wrong
about you! Get into my office right now!", which
is, so far, a perfect indicator of failure around
here!
But Greenspan also enlightens us
that "Risk management seeks to maximize
risk-adjusted rates of return on equity; often, in
the process, underused capital is considered
'waste'." Wow!
I love this! I was so
excited that I sat the kids down and told them
that gambling with every dime I can squeeze out of
anything is not "gambling" anymore; it is "risk
management", and it is now obvious that I am a
modern kind of guy seeking to "maximize
risk-adjusted rates of return"!
Then I
reminded them that, as they say in Las Vegas,
"It's only a gambling problem if you're losing",
which is manifestly true, as no one seeks
professional help because their gambling is
leading to them to make a lot of money and have a
lot of fun dating Vegas showgirls!
And
then I added, with an excited giggle to show them
how wonderful this new plan was, "And that
includes your college funds!"
I did not,
as I was hoping, get the enthusiastic response
that I was looking for, and instead they became
very hostile, which made me laugh to myself since
they are unaware that I have been borrowing money
from their stupid funds for years and years, and
there isn't that much left to get upset about.
Hahaha!
I figured that they were going to
challenge my assertion that Greenspan even said
such a stupid thing, so I was ready for them to
throw various cushions and bric-a-brac to
accentuate their cries of "You lying bastard! You
Thieving, Low-Life, Worthless Mogambo Lying
Bastard (TLLWMLB)!", like it's the first time I
ever heard that or something.
I held up my
hand to protect my face from what appeared to be a
flying chicken bone that someone found under the
couch, and said, "Wait! Wait! He said it right
here in the essay! He implied that Black Swan
events are real, and that 'We will never be able
to anticipate all discontinuities in financial
markets. Discontinuities are, of necessity, a
surprise.' So surprise, kids! You would have lost
in the end anyway!"
Anyway, the whole of
the article is insulting in his "nothing is my
fault" explanations and weird rationales, and
especially in the fact that he does not mention,
even in passing, the crucial role he played in it
all; without the Federal Reserve creating so
damned much, so impossibly much, so
incomprehensibly freaking much money and credit
for all those years, the collapsing booms could
not have happened, and so there would be no busts
to with which to deal.
From Junior Mogambo
Ranger (JMR) John P we get some advice for those
who think that they can actually model and control
an economy with equations in computers, like the
morons at the Federal Reserve and in most of the
universities in this country, I am sorry to say.
He says that it will make sense to them if I
remind them that, "The fact is that a partial
differential of one of countless variables in a
feedback equation that has not yet been written is
meaningless once that equation has gone
chaotic!!!"
As I am still intently trying
to master the intricacies of simple addition and
subtraction, the reference to partial differential
equations leaves me cold, so I try and deduce what
in the hell he is talking about from the clues
that 1) the system has gone chaotic and 2) that
there are three exclamation points at the end.
And then, like Sherlock Holmes, I note
that the horrible, terrifying answer is contained
in the clues; "there are three exclamation points
at the end". And there they are! It's the end!
Ugh.
Junior Mogambo Ranger (JMR) John
says, "As far back as I can remember, Congress has
been a proponent of the Charlie Brown philosophy:
'There's no problem so big that you can't run away
from it'!"
And in the Funny Times
newspaper was a cartoon by somebody named Mueller,
which showed two homeless bums sitting on the
sidewalk, and one of them says, "We should spend
our way out of this." Hahahaha! Fabulous!
Putting them together, the government is
going to pull out all of the stops, and that means
that more money is going to be created than the
world has ever seen, and thus inflation in prices
is guaranteed, and that means that you should
start buying gold today. Lots of it! And don't
stop!
Richard Daughty
is general partner and COO for Smith Consultant
Group, serving the financial and medical
communities, and the editor of The Mogambo Guru
economic newsletter - an avocational exercise to
heap disrespect on those who desperately deserve
it.
Republished with permission from
The Daily
Reckoning .
Copyright 2008, The Daily
Reckoning.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
