fondly remember my wife’s “Grampy”, Stoughton Atwood, as a WWII hero,
patriarch of a large family, storyteller and erstwhile magician. While I am in awe of people of the greatest
generation like “Stought” for their heroism and selfless demeanor, it
is those darn magic tricks that I keep thinking about. At the last
Atwood family reunion I attended, there was Grampy, doing his tricks,
linking and unlinking rings and doing funny things with string. He was a little slower than in years past, but
I still scratched my head wondering “how’d he do that?”
In two weeks, we leave for North Carolina and the
latest Atwood reunion. Grampy will not be
there. He is now pulling quarters out of
God’s ear. He will be remembered and
celebrated by all in attendance.
break, I find myself thinking more and more
about another magician; thinking about how he came to
orchestrate the most prolific, far-reaching display of financial magic
in history. Alan Greenspan has presided
over our economy and markets for the better part of two decades and in
so doing, garnered the reputation as “the maestro”.
His power and ability to manage the system has been
beyond question by most. Rabbits came
popping out of hats, beautiful women were sawed in half and
reassembled, and the ace of spades turned up every time as we faced the
Russian meltdown, Asian contagion, LTCM and a host of other challenges
to our financial safety.
now, like Grampy in his latter years, Mr. Greenspan is beginning to
slow down a bit. The tricks are the same,
but they just don’t have the same snap and pop to them as they once
did, and some in the audience would swear they’ve seen the beautiful
woman sneak out the back of the saw box. But
who is failing, or is it something else? Maybe
environment is just not right
anymore for the same old tricks of days gone by.
bond market is one trick that I don’t expect will continue working,
current counter-trend rally aside. A
reduction in the massive Asian vendor-financing scheme will see to that. How about the relatively tame CPI and PPI
numbers? That trick has always worked well
in the past. But again, the audience
already knows something is not quite right there. Gold
control. Maybe he can
point to that and say “See dear friends, nothing to worry about. We won’t need additional rate increases after
all. In fact, just to make sure our
recovery stays on track, we have balanced our bias evenly between
inflation and deflation going forward.”
the book! DIVERSION! “Get
looking that way at our stance on fighting inflation, but in
reality we’ll pull off a feat of liquidity the likes of which the world
has never before seen! Now, how to do this? Monetize government debt?
Buy the stock market so all those insiders can sell
to us (and by “us” I mean US as in the ever dependable taxpayer)?"
ways, including Dr. Ben Bernanke’s
is staggering now, making grotesque sounds and starting to get
downright mean after having been mostly benevolent for 1.5 years. The monster needs more of the juice that
created and sustained it. The trick
will be to figure out how to justify it.
this moment, I am trying to figure out which way to look, other than
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