I’m fundamentally bullish on American business, as are Mr. Greenspan and Mr. O’Neil. Good businesses with bad balance sheets are fixing their balance sheets, and bad businesses with bad balance sheets are going out of business. This is the way that capitalism is supposed to work. Unlike Mr. Greenspan, however, I see no reason whatsoever to anticipate a return to robust business investment any time soon. To expect such a thing after a bubble is to put out the landing lights for Amelia Earhart. She may return, but I see no reason to bet it that way. Bubbles do not re-bubble for a very, very long time after they blow up.So the questions are numerous, but here's a sample:
But that does not mean that the American economy is a fundamentally bad business, just that it must change, with a shifting of resources away from business investment to household investment and consumption. And a housing bubble fits the bill. So I’m not critical of Mr. Greenspan at all for helping to inflate one, despite bellyaching about mal-investment from members of the Austrian School of economics (there must be a lot of you, gauging from the volume of email I get accusing me of intellectual or moral bankruptcy, or both!). Better a bellyache than an empty belly, I say.
- Is this market commentary genuine?
- Was Greenspan's goal to create a housing bubble?
- Was Greenspan capable enough to pull such a thing at will?
- PIMCO is an evil company, and has been for quite some time.
- Members of the Austrian School of economics were right about McCulley 's intellectual AND moral bankruptcy (both!).
- Krugman is an idiot, and has been for quite some time.