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Alan Greenspan’s Left Behind Series

“... a few doors up from Vijay stores, that numinous mixed business where you could buy both Time, with which you could polish your furniture, and Hope, with which you could wipe your bum...” (From Salman Rushdie’s The Moor’s Last Sigh, Pantheon, 1995.)

Tuesday’s little Wall Street crash, begging the inevitable, had me remembering those wistful days when September Elevens weren’t more than dates to be plucked off the palm trees and savored for their leathery histories: I’m looking at the Sept. 11, 1978 issue of Time magazine, the one with the Laughing-Cavalier face of Menahem Begin on the cover and an earnestly jubilant (too jubilant as it turned out) Pope John Paul I in the upper-east corner, his hands turned up too trustingly to heaven, whose claws had already grazed half-way down poor Albino Luciani’s 33-day reign. He’d be dead seventeen days later (Two of 1978’s Top-40 hits for all of you conspiratorial numerologists: “Cheesburger in Paradise” at No. 20 and “Stayin’ Alive” at No. 8), and the nugget of “Godfather III” was born. Time magazine has never been more than People Magazine with fewer bikinis and more business suits. But at least back then the world existed on its radar, so did a smidgen of serious news. The Reagan era of Amnesia Again in America was still a couple of years off. The famous upcoming Camp David meeting between Sadat, Begin and Carter takes up several pages, then comes Somoza’s last days in Nicaragua on page 26, “The Shah Mollifies the Mullahs” on page 31 (no one has ever really accused Time of being more accurate than in a PR sort of way), Brazil’s street children on p. 32, even Kenya thrown in there for good measure. In the economy & Business section, a looming, black-and-white picture of… the Twin Towers to accompany a short article about the Deutsche Bank hinting about buying the towers ( Das Welthandelzentrum).

These days Time’s cover stories are weekly immersions into America’s narcissism: If it isn’t Andrew Weil bearding his latest quackery about living longer or an equally whitish cover fretting about detecting heart attacks, it’s the latest desperate housewife agonizing over “That Spare Tire,” Darth Vader lamenting “The Last Star Wars” (Dick Cheney lamenting the end of SDI not being available), something about who decides “The End of Life” or the right time to staple your stomach or the wrong time to retire or the best hour in the day to divorce your spouse and still make that 401k pay killer dividends, and of course every time Christmas or Easter or Ramadan or Saturnalia rolls around, it’s the People Magazine treatment of the “real” Virgin Mary or the Jesus nobody knew or the Mohammed only Khadijah knew or the God only our Lord and Savior President has the Texan-size cojones to know and love enough set in His place with the kind of tough love that other balding fascist Dr. Phil would be proud of.

Speaking of God (which is really the point of this digression through palm trees) it’s page 53 that concerns us most. There he is, under a promising headline (“After a Slowdown, the Boom of 1981”), our Lord and Savior’s own Richelieu himself—“Economist” Alan Greenspan, the “celebrated conservative and inveterate pessimist” (that was, to be sure, before 2001, when optimism became the GOP’s loyalty oath). But back to September 1978: “I haven’t been so optimistic about the economy’s long-term prospects in 20 years,” he tells Marshall Loeb (the revolving doorman of financial journalists who, last I heard, had his name atop priceline.com’s masthead even as he continued to write cheerleading columns for CBS’s marketwatch.com; with journalists like these—Loeb even edited the Columbia Journalism Review in the 1990s—no wonder it’s an Enron-on-the-Greenspan kind of world). So Greenspan was predicting two more sluggish years, then a boom regardless of who got elected. Why? Capital investment was up, budget-cutting was in: “We will see a major expansion in spending for energy conservation and development. For nuclear, solar, shale, sands—all of them. We will get an extraordinary amount of basic research. There will be an awful lot of replacement and modernization across the board—in steel, paper, textiles, chemicals, aluminum. I don’t know of a single industry that will not draw enhanced investment.” He may have been wrong in a couple of details but not in the main (his prediction of a “shallow” recession in 1980, hitting bottom that autumn, was almost dead-on, give or take a few quarters, but missed the worst recession since the Depression a year later). And, as Loeb concluded, “the fellow who is sworn in as President on January 20, 1981—Jimmy or Jerry or Teddy or somebody—will inherit an economy that, Greenspan feels, will rise with a bang.” We did as it turned out get that somebody, and as Greenspan himself testified, not nearly so obscurely as he usually has since: That somebody had very little to do with the 1980s boom, as Somebody’s ideological descendants, our reigning amnesiacs, love to claim.  

Therefore, to the punch-line: Alan Greenspan retired just over a year ago (has it been that long already?) after eighteen years as the Fed chairman. He has been, to quote the Economist, a man “who is often called the second most powerful person in the country.” More powerful, it’s easy to argue, than any single member of the Supreme Court or any grab-bag of congressional gasbags. His replacement, Ben Bernanke, has turned out so far to meet Wall Street’s expectations, if not demands, for a quiet, uncomplicated sort. Do we remember now that the position could have gone to the likes of Larry Lindsey, a loyalist Bush fired in 2002 for predicting that the Iraq war could cost $200 billion (cost so far: $550 billion), Glenn Hubbard, who was chairman of Bush’s White House chamber of commerce occasionally known as the Council of Economic Advisers, and Martin Feldstein, who had the good sense to call the Reagan deficits and supply-side economics by its given name in Economics for Dummies: Nuts. He had my vote for the Fed chairmanship. He never got Bush’s vote for having DISLOYALTY written all over his heft.

The very last article in that 1978 issue of Time was headlined “Running a Good Thing into the Ground.” Greenspan didn’t predict that one, but we’re living it: Greenspan’s profligate years of bouncing from exuberant bubble to exuberant illusion are over. Who even a few years ago could have imagined that what happens in Shanghai’s stock exchange could cause shocks on Wall Street? Hasn’t it always been the other way around? Not this time. Not anymore. What, after all, is the Number 1 song in the United States right about now? Timberlake’s “What Goes Around Comes Around.”

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