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Greenspan Says Greece Default ‘Almost Certain,’ May Trigger U.S. Recession
- deleted 15y ago[deleted]
- mkr-hn 15y agoWhy does the article mention Greenspan's age?
- WalterSear 15y agoBecause that's what passes for hard hitting journalistic research these days.
- anamax 15y agoDon't be so mean. If they report his age, they're likely to get at least one fact correct in the article.
- ChrisLTD 15y agoI was taught in journalism school to mention the subject's age when possible. It doesn't take a lot of space and can be valuable information in some cases.
- dolvlo 15y agoWell your journalism school by definition is ageist.
- gaius 15y agoIt's important context. It tells you a lot about the events that a person has lived through that inform their opinions. I'm too young to have any real memories of stagflation and Reaganomics, for example, but I can tell you all about the NASDAQ meltdown of '01...
- kreek 15y agoAlmost certain. "Euro rises versus dollar as Greek debt fears ease"... http://www.forbes.com/feeds/ap/2011/06/17/general-dollar_8522360.html http://www.forbes.com/feeds/ap/2011/06/17/general-dollar_852...
- WildUtah 15y agoGreenspan says default because he doesn't think the Greek government will pay. The Euro is in fine shape because investors don't expect to lose money on their Greek bonds. What is the difference? Investors (and probably Greenspan) expect the Germans to bail out the Greeks and pay off their debts. So the Greeks will default and the investors will still keep their money. The main problem in the whole situation is hiding the deal from German voters and taxpayers. Nobody wants to take responsibility for TARP.
- ignifero 15y ago... and the french
- Roboprog 15y agoThe irony of Greenspan worrying about Federal debt when he was pushing to NOT pay it off a decade ago -- tax cuts solved that. And setting interest rates below inflation really killed off the idea of anybody saving money (cash) in the bank only to watch it evaporate. Cursed Fed. Printing money like mad does help generate inflation, though, which helps keep labor costs (our pay) down by effectively handing workers a little pay cut every year.
- gaius 15y agoAKA Krugmanomics
- j_baker 15y agoDuring normal times you'd be correct. But bear in mind that inflation is (or was) near 0% during the recession. A certain amount of inflation is necessary for the economy and is much less scary than getting stuck in a deflationary cycle like what we saw during the Great Depression.
- Spyro7 15y ago"does help generate inflation, though, which helps keep labor costs (our pay) down by effectively handing workers a little pay cut every year" You do realize that wages are adjusted for cost of living changes over time? (This is a gross simplification of the actual process, but the fact remains that wages are not constant in the face of inflation.) Take a look at this please (using median wage here to make this more clear): http://www.wolframalpha.com/input/?i=all+occupations+median+wage&lk=1 http://www.wolframalpha.com/input/?i=all+occupations+median+... However, here is median wage too: http://www.wolframalpha.com/input/?i=all+occupations+mean+wage http://www.wolframalpha.com/input/?i=all+occupations+mean+wa... It is also worth noting that the average wage back in the '70s was roughly $8,000.00. Edited in Response to Downvoting: Inflation is caused by rising prices, and wages are one of these prices. Your wage is simply the price of your labor. In the long-run, wages are flexible just like all of the other prices. Admittedly wolfram|alpha does not have extensive historical graphs available, but I am not trying to write a book here. If you are down-voting because you have not received a pay increase lately, then you should be aware of the fact that wages are usually a bit more sticky than other prices in the short run. If you are down-voting this, I would appreciate engaging you in honest discussion about the point that I made above. The parent post said that inflation gives workers a little pay cut every year. Painting this wonderful image of a worker sliding into poverty. This is demonstrably false. Yes, a 1% or a 2% rise in inflation will impact your real earnings, but wages are not a static process and they do reflect the actual costs of living changes that take place over time. As an economist, I am constantly amazed by how poorly the press discusses inflation and how little most people know about what inflation is and how it interacts with other variables within an economy. Please read this pdf for some discussion on wages and price inflation: https://www.clevelandfed.org/research/policydis/pd1.PDF https://www.clevelandfed.org/research/policydis/pd1.PDF It is an academic piece, but it is one of my favorites for illustrating the interaction between wages and the greater macroeconomy.
- c2 15y agoSeems a little high on the fear mongering and a little light on the details. I fail to see how a Greece debt restructuring would negatively impact the US economy except to cause a little more fear on wall street. Also - anyone else notice that the only people who seem to give praise to Greenspan are his ex-colleagues in the central bank?
- dpapathanasiou 15y ago"I fail to see how a Greece debt restructuring would negatively impact the US economy" Is $41 billion at risk insignificant? http://www.marketwatch.com/story/greece-poses-41-billion-risk-to-us-banks-2011-06-15 http://www.marketwatch.com/story/greece-poses-41-billion-ris...
- WildUtah 15y agoCompared to the size of the USA bond sector, yes $41 billion is insignificant. Compared to my personal holdings, I'd be willing to consider even half of that amount significant. Send my bailout as a check or money order, please.
- dpapathanasiou 15y agoExcept the banks holding the bag have taken TARP funds, and are still struggling. Plus the $41 billion number is just an estimate; the real total won't be known until all the derivative contracts are unwound. Either way, it would be a mistake to dismiss a Greek default as irrelevant to us.
- c2 15y agoExcept most of the banks have paid back TARP. Most major banks are back to 10+ % profit margins (only one lower I found was BAC). Out of the 700 billion TARP fund, only 51 billion remains outstanding (as of September last year), which is larger then the 41 billion number you were floating around: http://online.wsj.com/article/SB10001424052748703431604575522242672430182.html http://online.wsj.com/article/SB1000142405274870343160457552... I'm not saying all banks will be fine if Greece "defaults" (remember in this case "defaulting" implies restructed debt), but causing a US recession? Highly highly unlikely.
- bugsy 15y agoUS problems have nothing to do with Greece. What an absurd scapegoat from Greenspan, the incompetent loser that got us into this mess.
- anamax 15y ago> US problems have nothing to do with Greece. The argument is that US banks hold a fair amount of european bank paper and that european banks hold a lot of greek debt. If the greeks default, then those european banks are in trouble, which puts the US banks in trouble. We saw a variation on this at the beginning of the "great recession". US banks held too much Fannie and Freddie stock because the regulators gave it special status. When fannie and freddie went down, those banks became technically insolvent. I don't know what triggered Lehmann Bros' specific problems, but when it went under, that caused problems for its counterparties.
- Tycho 15y agoIn other news today: Italy's credit rating was downgraded by Moody's.
- thornad 15y agoAlways blame the victim.