Alan, We Hardly Liked Ye

Wow, what a scum-bucket. Dr. Greenspan...really?

While borrowers can refinance fixed-rate mortgages, Greenspan said homeowners were paying as much as 0.5 to 1.2 percentage points for that right and the protection against a potential rate rise, which could increase annual after-tax payments by several thousand dollars.

He said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.

You could extend this logic, of course. You can make millions of dollars, ex post, if you buy the correct lottery ticket, with the winning number. But "buy lottery tickets" is hardly sound investment advice, though of course that is exactly what people did, on a huge scale. Further, trying to get people to buy ARMs, and then jacking up rates by 425 basis points... why? I have no problem with the higher rates, but knock it off with the investment advice, Dr. G!

My pal Hal Snarr, at NC A&T, wrote this piece. I don't agree with all of it, but the "financial molotov cocktail" part seems right.

Hal's points about Glass-Steagal.... well, two cheers for Glass-Steagal. I agree that "too big to fail" is "too big," but only because the buttinski-trons at Treasury and the Fed insist on giving out taxpayer money.

Somali pirates are the Alan Greenspans of Kenya!

It's true people, the Associated Press wouldn't lie:

NAIROBI, Kenya – Property prices in Nairobi are soaring, and Somali pirates are getting the blame.

The hike in real estate prices in the Kenyan capital has prompted a public outcry and a government investigation this month into property owned by foreigners. The investigation follows allegations that millions of dollars in ransom money paid to Somali pirates are being invested in Kenya, Somalia's southern neighbor and East Africa's largest economy.

The article also features excellent quotes from gen-u-ine pirates:

Pirates in Somalia say they invest their ransom money outside their war-torn country, including in Kenya. One pirate who gave his name as Osman Afrah said he bought three trucks that transport goods across East Africa. A second pirate, who only gave his name as Abdulle, said he's investing in Kenya in preparation for leaving the pirate trade.
"Pirates have money not only in Nairobi but also other places like Dubai, Djibouti and others," said Abdulle. "I have invested through my brother, who is representing me, in Nairobi. He's got a big shop that sells clothes and general merchandise, so my future lies there, not in the piracy industry."

You gotta love the forward thinking, eh? After all you can't spend your whole career in the piracy industy.

My View on Angus' "Cheap Dollar" Post

Wow, there is quite a bit here to comment on. Angus said some things about the dollar....

1. There are some things I know more about than Angus. Not many things, and not much more, but some. Social choice theory, Hayek's later books, campaign finance law. But the intersection of monetary theory and trade? Please. Not only does Angus understand this better than I do, he understands it better than almost anyone. So, on the merits, and given that he is making quite a simple point, I would defer to him.

2. Besides, on the merits, I agree with him on the main point, completely. Who gives a crap about the dollar? Why should we care what currency the rest of the world uses? The dollar is big enough, and the U.S. is big enough, that the rest of the world can switch if it wants. Besides, money is by and large a veil, though "when the veil flutters, real output sputters." That just means that you need something stable, limit discretion of the Fed, and then go back to making stuff and selling it. Seignorage is basically theft, anyway. Let it go.

3. I'm not sure the actions of the Fed "helped avert catastrophe," as Angus claims. But in a comparative sense, compared to 1933-1936? You bet: catastrophe then, caused by Fed, no catastrophe now, possibly helped by Fed (though Fed did cause problem in first place; see below). Bernanke did NOT contract the money supply and force everyone with upside down balance sheets to liquidate. So, Angus said, "Unlike the Fed of the 1930s..." and he points out that the weakness of the dollar is at least partly because of "vanishingly low interest rates." I just don't see anything to disagree with there.

4. Now, one could easily criticize Angus for being a big Fed-lover, and wanting to have Greenspan's baby. After all, it was Greenspan who suppressed interest rates artificially, and inflated the housing and asset bubble. Yet Angus has consistently defended Greenspan, right. Oh...wait...that's not right, as even a casual reading of previous posts can show (commenters: Google is your friend. Read before you say stupid stuff). There's this, and then there's this, and (I could go on). Angus has hammered the Federizer Bunnies consistently for years.

5. Finally, BOTH of us have consistenly hammered Porkulus. That canard ("You support the stimulus?") is not even worth considering.