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Hey! Imagine That!
The debate about quite who was responsible for the Bubble continues in the Jackson Hole Fed get-together, amid much self-exculpatory hogwash from Sir Al and a deal of sound sense from the Europeans and Japanese. But the Fed, like all such institutions, doesn’t eat its own, so criticism from that venerable old curmudgeon of the 1980s bond market, Dr Doom himself, Henry Kaufman – that Greenspan could have done more to keep stock prices in check by making a public statement to the effect that Wall Street had pushed itself to irrational levels – drew a swift, if unsurprising, response from one of the Insiders as Greenspan’s former No.2, Larry Meyer, popped up instantly to reply that central bankers could not ‘use their positions to destroy wealth’, according to the Washington Post. "That's a politically untenable situation for a central bank to be in," he said. Not destroy wealth? The Fed? Puh-leeze! Look. Let’s leave aside the current little local difficulties in the securities markets of the Homeland, or, indeed, the ongoing devastation being caused to economies all over the world, largely thanks to the evils of Dollar Imperialism. What about the fact that from the end of the American Civil War (or The War of Northern Aggression as our southern friends more aptly term it) to the start of the Great War, just after the Fed was formed, consumer prices were effectively unchanged, whereas, since its inauguration in 1913, they have risen eighteenfold? What about the accelerating pace and expanding scale of the Boom-Bust cycles, the financing of two global holocausts – to say nothing of a whole host of 'police actions' – and the facilitation of the centralized control of just about everything we do? Quite how much wealth do Greenspan and his ilk have to help destroy before anyone objects, or before they are found 'politically untenable'? But, no matter. Lower rates will soon work their magic, won’t they? Won't they? Hmmmm. Well, consider the following clipping from the weekend press. ‘Even if U.S. interest rates were knocked down to zero, small manufacturers still would have trouble competing with foreign companies for business, a group of Midwest manufacturers told Federal Reserve Vice Chairman Roger Ferguson Thursday', reported Reuters. "Everything is out of control and there is nothing we can do about it," Eric Anderberg, general manager of Dial Machine Inc. in Rockford, Ill., said during a round-table discussion. Anderberg didn’t blame interest rates, but Leviathan itself, naming government restrictions, high taxes, the costs of doing business in the United States and the strong U.S. dollar. Unfortunately, there are no easy solutions to all that in a world where Collectivism makes bigger inroads on free enterprise every year and, sadly, as always in times of national distress, such Collectivism is enjoying something of a Bull Market. As Kirstin Downey Grimsley reported in the Post, more than half the Americans surveyed in August said they supported unions organizing workers in more companies to ensure that they are better protected, according to the Employment Law Alliance of San Francisco Meanwhile, nearly three-quarters said there should be mandatory representation of rank-and-file workers on corporate boards, and almost seven-eighths said employee pension funds should force corporations to be more accountable. While the latter is unobjectionable (indeed, it should be a responsibility), the former – as usual – misses the point that the workers – much less the self-serving bureaucratic outsiders in organized labour – do not OWN the company, the shareholders do. If the workers want more say, they, their union representatives, or their pension fund officers have two options; to stand for election to the board in front of the existing shareholders, or to buy enough of the company’s stock to exert such control, rightfully, along with all the other proprietors. Otherwise, they can stop whining and get on with delivering a day’s labour to their long-suffering employers. The poll results indicated a "high level of mistrust, anxiety and frustration . . . that can be felt in every assembly line and cubicle throughout America," Ms. Grimsley wrote, quoting Stephen J. Hirschfeld, chief executive of the ELA, who added meaningfully, "This is a major change in people's perceptions." (You REALLY should get out of your deep-piled and aged-leather office more, Steve.) "Working Americans are anxious and struggling," AFL-CIO President John J. Sweeney intoned, quick to seize the opportunity to sow discord. "Wages are stagnant, unemployment is up, and people are angry that they are losing their savings to a corrupt corporate system they thought they could trust." No. For all that the latest round of executive charlatans are hogging the limelight at present, Mr Sweeney, you might reflect that the combined effects of the corruption of state welfare, fiat money and union bullying has meant that capital is more scarce than it need be, and that is really why wages are stagnant, unemployment is up, and people are losing their savings to a corrupt system they thought they could trust. Meanwhile, ignorance is, as usual, proving more of a threat to US prosperity than anything the Taliban or Saddam could achieve. A Gallup Organization poll in July found a large increase in the percentage of the population that considers "big business" to be the "biggest threat to the future of the country." I kid you not. 'Big business' was right up there ahead of the likes of Eminem and 'global warming', Paul Wolfowitz and space aliens! Nearly two respondents in five said they considered big business to pose the most danger to Americans, up from just under a quarter in October 2000, said the Post, and the percentage of the population that viewed big business as a threat had never been so high in the 48 years pollsters had asked the question. Allah Akbar! Obviously, Osama bin Laden should have quit his cave right after the Soviets went home and Ziggy B fired him. He should then have hit the books and completed his MBA at Harvard, like his dutiful brothers and cousins among the Carlyle Group's clientele. That way, as a fully-accredited member of Big Business, he’d surely have brought the Great Satan to his knees long before now... September 4, 2002 Sean Corrigan [send him mail] writes from London on the financial markets, and edits the daily Capital Letter and the Website Capital Insight. Copyright © 2002 LewRockwell.com
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