Board-Ansicht
Mix-Ansicht- Genügend Gründe warum € 1.00 mindestens US$ 1.50 kosten wird: - Emerald, 18.11.2003, 08:34
- und dann soll Gold steigen? (owT) - - Elli -, 18.11.2003, 09:44
Genügend Gründe warum € 1.00 mindestens US$ 1.50 kosten wird:
-->
Greenspan talks while Australia and Europe act.
Today, Greenspan warned that the soaring government budget deficit must
be brought under control. He lamented that politicians in Washington
currently only talk about tax cuts or spending increases, but not about
spending cuts. In just 5 years, the first wave of baby boomers reach
the age of 62, the time when about half of prospective Social Security
beneficiaries choose to retire. Greenspan warned that government
finances must be brought under tight control now to alleviate the
inevitable financial burden we will face.
Greenspans strong words remind us of his"irrational exuberance" speech
warning of the stock market bubble a few years ago. There are
similarities not only because he warned of a building crisis, but also
because then, just as now, he only talks about the problem, but does
not employ the resources within his power to face the challenges.
Greenspan has argued, he couldn't have averted the technology bubble
because raising for example margin requirements would only have had
limited effect. Well, maybe, but he didn't try until a couple of years
later, when indeed he was able to bring the economy to a stall with
restrictive interest rate policies.
As we pointed out in our Q2 newsletter, most central bankers would
react to the lack of fiscal discipline by making it more difficult for
the government to spend money, e.g. by raising the cost of borrowing.
Instead, Greenspan has supported Bush's determination to get the US
economy going again, at any cost.
Possibly because of a worldwide outcry about the explosion of both
budget and current account deficits, and because there are signs that
the US economy is on an upward trajectory, Greenspan has taken the foot
off the gas pedal for now - M3 money supply growth has slowed
significantly in recent weeks.
Greenspan is serving his government; being surrounded by politicians
all the time, he has forgotten that he should first serve all
Americans. While it would be painful for American consumers and the US
government to be forced to be more prudent about spending, Greenspan
could do much more to prepare us for the financial burden that we will
face when the baby boomers retire.
Interestingly, Australia and the Bank of England just increased
interest rates. Australia has a highly commodity-driven economy and is
facing inflationary pressures due to the boom in the commodity markets.
But even the Bank of England deems it prudent to ensure financial
discipline is not lost.
And maybe in the starkest contrast to Greenspan's words, are the
actions announced by the German state of Bavaria. The conservative
state government recently won a landslide victory achieving a
two-thirds majority. Rather than using its powers to pour money into a
slow economy, the state of Bavaria has announced an austerity package
to prepare the state for the financial challenges of the future. Also
today, the German federal government announced that pensioners will
receive no increase in their pensions next year. And separately, labor
unions in the Netherlands recently accepted freezing salary levels
without a fight.
Europe has its set of problems, but for now, structural reforms
continue to be implemented, there is an impending cyclical recovery,
and select areas are taking their problems very seriously. In the
meantime, Greenspan helps to re-inflate a bubble; US consumers will
have to pay the price with higher interest rates and a lower dollar
down the road.
And the US consumer can ill-afford higher interest rates: the US
consumer is getting more"sophisticated" by converting ever more
purchases into leases. Recently, the Federal Reserve Bank even revised
a key measure of household debt payments to reflect the fact that the
US consumer no longer buys, but leases or rents an ever greater array
of goods and services. Combined with an extremely low interest
environment, this has led not only to a further ballooning of consumer
debt, but also to an amplified sensitivity to interest rates. The
longer Greenspan lives in denial and only talks about problems rather
than addressing them, the more serious the problems are going to be that
the US consumer and world economy will have to deal with down the road.
Thread gesperrtgesamter Thread:
