Greenspan: "This Is The Worst Period I Recall; There's Nothing Like It"
During a CNBC inteview today, when discussing the historic Brexit vote outcome, Alan Greenspan unleashed a fiery sermon that could have been prepared just by reading a random selection of posts from this website, the former Fed chairman told his shocked hosts that the current period, far from the raging "Obama recovery" spun every day by adaministration propaganda appratchicks and one that prompted the Fed to unleash a ridiculous rate hike cycle in December just as the US is sliding into a recession, and is instead the "worst period" he has seen, surpassing even the infamous Black Monday in severity.*Credit Alphaville's Cardiff Garcia for the "vortex" as referenced in "Why strange loops could be an argument for artificial intelligence".
"This is the worst period, I recall since I've been in public service. There's nothing like it, including the crisis — remember October 19th, 1987, when the Dow went down by a record amount 23 percent? That I thought was the bottom of all potential problems. This has a corrosive effect that will not go away. I'd love to find something positive to say."
Of course, what he is referring to was a market shock which was the result of a massive capital account imbalance resulting from the aftermath of the Louvre Accord coupled with the then trendy Portfolio Insurance (in which everyone was on the same side of the boat, much like now) and not so much an all out economic malaise. Which, however, does beg the question when a Black Monday-like market crash is coming?
Rhetorical questions aside, Greenspan was referring to the unprecedented combination of economic stagnation, deteriorating demographics, insolvent entitlement programs, social inequity and wealth division, and of course, a historic debt overhang which could and should have been cleared out in the crash of 2008 but instead was preserved to avoid wiping out the same "equityholders" who also happen to be the Fed's direct and indirect stakeowners.
To be fair, Greenspan, who in recent years has become one of the loudest advocate of gold alongside billionaires such as Druckenmiller and Soros, did not say anything our readers did not know. The former Fed chairman said that the root of the "British problem is far more widespread." He said the result of the referendum will "almost surely" lead to the Scottish National Party trying to "resurrect Scottish Independence."Greenspan said the "euro currency is the immediate problem." While the euro and the euro zone were major steps in a movement toward European political integration, "it's failing," he said. "Brexit is not the end of the set of problems, which I always thought were going to start with the euro because the euro is a very serious problem in that the southern part of the euro zone is being funded by the northern part and the European Central Bank," Greenspan said....MORE
Meanwhile Paul Krugman is a little ray of sunshine:
Brexit: The Morning After, by Paul Krugman, NYTimes: Well, that was pretty awesome – and I mean that in the worst way. ...
That said, I’m finding myself less horrified by Brexit than one might have expected – in fact, less than I myself expected. The economic consequences will be bad, but not, I’d argue, as bad as many are claiming. The political consequences might be much more dire; but many of the bad things I fear would probably have happened even if Remain had won.
Start with the economics. Yes, Brexit will make Britain poorer. It’s hard to put a number on the trade effects..., but it will be substantial. ...
But right now all the talk is about financial repercussions – plunging markets, recession in Britain and maybe around the world, and so on. I still don’t see it. ...