“In the beginning, there was Alan Greenspan…”
by Loretta Napoleoni
Author of Rogue Economics: Capitalism’s New Reality (Seven Stories Press)
April 15, 2008
Exclusive to Gregpalast.com
....................
In the beginning there was Alan Greenspan. Appointed by Ronald Reagan in the late 1980s as chairman of the Federal Reserve, Greenspan was a Master of the Universe, a title he earned by working for decades on Planet Wall Street. Greenspan took office as Fed chairman while the Evil Empire of Moscow was collapsing; after years of ruthless conflict, known as the Cold War, the Confederation of the Free World gained victory and
Greenspan was tasked with helping Western capitalism colonize Planet Earth. Worshipped by Western high finance -- the Supreme Council of the Free World -- Greenspan was considered the High Priest of future profits.......................
Greenspan eagerly got to work. His most popular move was to pursue a deflationary policy. He began cutting interest rates, which reduced the cost of capital. This was music to Wall Street ears. Victory over the Evil Empire had opened its borders for workers who had until then been trapped inside; these workers quickly joined the Western Europe labor force. In the space of a few years, the West’s labor supply doubled and salaries began falling. AS labor costs shrank, profits rose.
It HAS became apparent that the galaxy of global finance is not a real one. It is made of paper and accounting numbers. The subprime meltdown is destroying virtual empires erected by the Masters of the Universe: Carlyle Capital’s failure forced the bargain basement sale of Bear Sterns, whose CEO lost $800 million in the space of one day. As share prices plunge, investors on Wall Street may be worth hundreds of millions of dollars less when they leave the office in the evening than when they arrived in the morning. Don't cry for these guys. Losing a hundred million is nothing to those, like Bank of America’s mortgage unit chief, Anthony Mozillo, who pocketed over half a billion dollars in compensation for a bankrupt and bankrupting business.
Are we witnessing the beginning of the end of the galaxy of global finance? The collapse of the global house of cards constructed by Greenspan? Certainly this seems the case for Carlyle’s big lenders. Last week UBS, the swiss giant, wrote off $19 billion. In December 2007, UBS had already registered a loss of $12.5 billion because of the subprime mortgages, a loss luckily covered by a loan from two government investment funds, one from the Gulf and one from Singapore. Also this month, Deutsche Bank wrote off $2.5 billion and it is likely that in the coming weeks, the primary lenders of Carlyle Capital will issue more similar announcements.
What we are left with are two million families in the USA facing foreclosure, the collapse of manufacturing wages worldwide – and a memoir by Alan Greenspan that pretends his fantasy world was never exposed as a world crisis in the making.much more at:
http://www.gregpalast.com/in-the-beginning-there-was-alan-greenspan/#more-1996
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