Alan Greenspan, Keynesian

Justin, it's all well and good that we're all Keynesians now. It would have been better if we'd all (or at least more of us) had been Keynesians then -- might have avoided this whole mess in the first place.

What bdbd said?

Speaking of being a Keynesian now...how would one modify the monetary response with respect to inflation targeting (or God forbid, deflation targeting)??

Justin, are you saying that Keynes doesn't differentiate between a "boom" and a "bubble"?

To me, he's contrasting periods of sustainable economic growth with recessionary periods. A bubble, by definition, isn't sustainable.

As to the whole "irrational exuberance" thing -- it wasn't "irrational" so much as based on a false premise that was accepted as Gospel truth, i.e. the "you can't lose money in the stock market over the long term" meme.

The analyses that lead to that conclusion was true RIGHT UP TO THE MOMENT THAT IT WAS ACCEPTED AS TRUE. The minute people believed that it was true, it became false, because of the downward pressure on stocks from the sense that stocks represented "risk." Eliminate the perception of risk, and throwing money into the stock market suddenly becomes the most prudent investment strategy for the "average american".

Once "average americans" got back into stocks in a huge way (either directly, or through their retirement plans), it was all over -- not only did it provide a steady flow of new capital into the stock market, it suddenly became absolutely essential for politicians to support policies that would restrain stock price inflation and ensure that the market never went anywhere but up.

Its because people saw their IRAs and 401ks going down in value that this bailout is happening the way it is -- creating the ultimate moral hazard of "rescue" packages based not on sound fiscal policies, but on keeping voters happy.

@lp1: Keynes does not differentiate between a boom and bubble. His argument is that it's almost impossible to differentiate.

Justin - With regards to your last column (about the strength of the American worker) I couldn't help thinking about how much we depend on immigrants for this strength. Think of the number of immigrants who have formed startup companies. Then think about the number of Native American college graduates who have gone into finance as a career.

By Native American, I didn't necessarily mean American Indians but people born in America

@lp1: Keynes does not differentiate between a boom and bubble. His argument is that it's almost impossible to differentiate.

really? while it may be difficult to pinpoint where a boom becomes a bubble, when asset values start going up at ridiculous rates, its obviously a bubble (I mean, I think Keynes would have looked at massive inflation in real estate prices and said "that's a bubble", don't you?)

THE George "W" BUSH FINANCIAL LEXICON

For use at the World Financial Crisis Summit

By WilliamBanzai7

Absquatulate- To disappear or get out of Dodge City

Alamos- The fall of Lehman

Ace-high ~ Highest rating agency score.

According to Hoyle ~ Regulatory requirements. Hoyle is the card playing dictionary.

A hog-killin' time ~A market bubble

Ambush- What "W" says to himself constantly "I am Bush"

A lick and a promise ~Over the counter trade

Bad medicine-Bad market news

Big hat no cattle- Paul Volker and Alan Greenspan

At sea ~ at a loss, not comprehending. "When it comes to finance, I am at sea."

Bail out-Bail out

Bandito- A sort seller

Bang-up ~ first rate. Similar to "heck of a" "The SEC sure did a bang-up job."

Bartenders- Rating agencies

Bank heist- Robbed by your banker

Bear sign ~ cowboy term for financial trouble.

Beat the devil around the stump ~ to evade responsibility or a difficult task. "Quit beatin' the devil around the stump and bail that sucker out."

Bend an elbow ~Forcing a bank to accept bailout money

Bender ~ drunk. "Wall Street's off on another bender."

Best bib and tucker ~ your best pinstripes.

Big gun ~ A Central Banker "He's one of the Feds big buns."

Bilk ~ Fraudulent behavior

Bone orchard ~ Cratered deals.

Boot Hill- The United States Bankruptcy Court Southern District New York

Bunko artist ~ Quantitative engineer

Bushwack- Selling repos or getting votes

Buzzard food- Level 3 asset

By hook or crook ~ to do any way possible.

Calaboose ~ jail.

Catawamptiously-Thoroughly, utterly. Catawamptiously insolvent!

Cattle Baron-Wall street CEO

Cattle Kate-Female investment banker

Chucklehead-An AIG executive

Chinaman- One who is loaded with capital

Chisel, chiseler ~ to cheat or swindle, a cheater.

Clean his/your plow ~ A good or bad trade

Coffee boiler ~ Jr Analyst

Copper a bet ~ Hedging or being prepared against loss. "I'm just coppering my position."

Come a cropper ~ come to ruin, fail, or fall heavily. "He had big plans to get rich, but it all come a cropper, when the bank failed."

Croaker ~ pessimist, doomsayer. "Nouriel Roubini is just an old croaker."

Crowbait ~ derogatory term for a poor-quality asset class.

Custer- Dick Fuld

Difficulty ~ euphimism for trouble, often the shootin' or otherwise violent kind. "He had to leave Wall Street on account of a difficulty with the SEC."

Deadbeat ~ Unemployed banker.

Dinero ~ from the Spanish, a word for money.

Don't care a continental ~ Don't give a damn about the EURO.

Down on ~ opposed to. "He is really down on cheap leverage."

Dragged out ~ fatigued, worn out.

Dreadful ~ very. "Oh, these CDOs are dreadfully lucrative."

Dry gulch ~ Short seller ambush.

Dude ~ an Easterner, or anyone in up-scale town clothes, rather than plain range-riding or work clothes.

Dude ranch- Bond conference

Eucher, euchred ~ to out-smart someone, to be outwitted or suckered into something. "We sure euchered that pension manager"

Fandango ~ from the Spanish, a big deal closing party with lots of dancing and excitement.

F Troop- The United States Securities Exchange Commission

Federales-Washington regulators

Fetch ~ bring, give. "Fetch me my blackberry."

Flannel mouth ~ an overly smooth or fancy talker, especially politicians or derivative salesmen. "I swear that banker is a flannel-mouthed liar."

Flush ~ prosperous, rich.

Fork over ~ pay out.

Four-flusher ~ a cheat, swindler, liar.

Fools gold- Synthetic CDO

Friendlies- Gullible investors

Full as a tick ~ Irrationally exuberant.

Fuss ~ disturbance. "They had a little fuss at the FED."

Get it in the neck ~ get cheated, misled, bamboozled. Goldman gave it to AIG in the neck.

Get the mitten ~ to be rejected by a potential investor. "Looks like the Koreans gave poor Fuld the mitten."

Ghost Rider- Bull market investor

Go through the mill ~ gain trading experience. (Often the hard way.)

Gold Country- The Gulf States

The Good, the Bad and the Ugly- Goldman, Lehman, Bear Stearns

Halleluja Trail- AMTRAK train to Washington DC

Hired Gun- Wall Street lawyer

Hole in the Wall Gang-Private equity fund managers

Hoosegow ~ jail.

Hot as a whorehouse on nickel night ~ volatile market

Is that a bluff, or do you mean it for real play? ~ Are you serious?

The Heckowy Tribe-AIG "Where the heck ah we?"

Hostile Indians-Mumbai short sellers

Jig is up ~ scheme/game is over, exposed. Loss of all market confidence

The "Judge"- Alan Greenspan

Let slide/ let drive/ let fly ~ go ahead, let go. "If you think you want trouble, then let fly."

Light (or lighting) a shuck ~ to get the hell out of here in a hurry. "I'm lightin' a shuck for Bermuda."

Loot- Cash bonuses

Lynch Mob- Angry shareholders.

Mudsill ~ low-life, thoroughly disreputable banker.

Nailed to the counter ~ proven a lie. That road show presentation is nailed to the counter.

Necktie social- Hanging someone with rumors

Nucular weapons-CDSs

OK Coral- NY Federal Reserve Bank

Odd stick ~ eccentric person. "Judge Greenspan sure is an odd stick."

Of the first water ~ first class. "It's a security of the first water."

Outlaw- Errant banker

Pardon my French- ____________

Pass the buck ~ What Wall Street CEOs do.

Pay through the nose ~ Settle of a credit default swap.

Peter out ~ Cheap market rallies peter out.

Pilgrim- Naive investor

Pistolero- Hedge fund guru.

Play to the gallery ~ to show off. "That's just how he is, always has to play to the gallery."

Plunder ~ personal belongings. "Pack your plunder, Joe, we're headin' for Dubai."

Posse- An underwriting sydicate

Powerful ~ very. "He's a powerful rich man."

Pull in your horns ~ back off a trading strategy.

Quick silver- Toxic equity tranche of synthetic CDO

Rake and scrape- Asset recovery in Chapter 11

Road agent- Distressed debt investor

Rodeo- A world market summit

Rodeo Clown- W

Round up- Looking for white knight investors

Rich ~ amusing, funny, improbable. "Oh, that's a rich pitch!"

Ride shank's mare ~ to be laid off.

Riding shotgun-What Bernanke does for Paulson

Rob the bank- Borrow from the Fed

Roostered ~ drunk. "Looks like those Wall Street boys are all in there gettin' all roostered up."

Russling- Making a market

Russler- market maker

Scatter Gun- The TARP legislation

Seeing the elephant ~ Going to Wall Street or the City of London, where all the action is.

Sell your saddle- Resign from office

Scalping- Marking to market

Scoop in ~ trick, entice, inveigle. "He got scooped into a credit swap and lost his shirt."

Scuttlebutt ~ market rumors.

Shave tail ~ a green, inexperienced hedge fund trader.

Shoddy ~ poor quality paper.

Shoot, Luke, or give up the gun ~ poop or get off the pot, do it or quit talking about it. Come on Hank, shoot luke or give up the gun!

Shoot one's mouth off ~ talk nonsense, untruth. "Wilumstead was shootin' his mouth off and Paulson gave him a black eye."

Shove the queer ~ to pass securitized assets (CDOs).

Simon pure ~ the real thing, a genuine fact. "This market bust is Simon pure."

Skedaddle ~ run like hell.

Smoke the Pipe- Listen to a lecture on self regulation and free markets

Snake oil salesman- Seasoned investment banker

Stage Coach- Limo service

Stampede-A market run

Stand the gaff ~ take punishment in good spirit. "Wall Street bankers can't really stand the gaff."

Stumped ~ confused. I'm stumped!

Sun up-Market open

Sun down-Market close

Superintend ~ oversee, supervise. "He just likes to superintend everything."

Take French leave ~ to desert, sneak off without permission.

Take the rag off ~ surpass, beat all. "Well, good old Warren knows how to take the rag off the bush."

The Old States ~ back East.

The whole kit and caboodle ~ the entire company.

The Unforgiven- Enron

Throw up the sponge ~ File Chapter 11 petition

Tombstone-An announcement

The Undertaker- Harvey Miller- Undisputed dean of the bankruptcy bar, currently represents Lehman

Up the spout ~ gone to waste/ruin. The bank's capital went up the spout.

Wake up/Woke up the wrong passenger ~ to trouble or anger an activist investor.

Wampum- Money

The Wild Bunch-Hedge fund managers

Wind up ~ settle. "Let's wind up this business and go home."

Wild West- Wall Street

Wyatt Erp- Andrew Cuomo

Yammerin- Talking to investors and taxpayers

while we're on the subject, Krugman's introduction to a recent Palgrave edition of Keynes' General Theory of Employment, Interest and Money is a nice read:

http://www.pkarchive.org/economy/GeneralTheoryKeynesIntro.html

THE THREE REGULATORY STOOGES
(The Three Stooges, Floyds Garage)
WilliamBanzai7

Snow he is the leader, Greenspan is a bleeder
Cox does a funny dance
Howling with laughter, and that was right after
McCain set fire to his pants

Best thing that's on CNBC
Wish we could watch them daily
I just love The Three Regulatory Stooges
Bumbling frustration
They are an obsession
Gotta love The Three Regulatory Stooges
They are so damn funny
Cox he is a dummy

Stooges Rule!

Finger to the eyeball, Then you watch them all fall
From a very high ladder
The one when they are playing with GNP numbers, they couldn't be dumber
Slapping Snow gets madder

Best thing that's on CNBC
Wish we could watch them daily
I just love The Three Regulatory Stooges
Bumbling frustration
They are an obsession
I just love The Three Regulatory Stooges
They are so damn funny
Cox he is a dummy
Stooges Rule!

They call him the maejstro Greenspan,
Got a wrench to the nose
Cox he needs a shampoo, Snow is hitting him too
Brain damaged from all his blows

Best thing that's on CNBC
Too bad we can't watch them daily
I just love The Three Regulatory Stooges
Bumbling frustration
They are an obsession
I just love The Three Regulatory Stooges
They are so damn funny
Cox he is a dummy

Stooges Rule!

Stooges Rule!