Monday, December 14, 2009

The two economies of Alan Greenspan

Paul Samuelson died yesterday at 94, by any standard the foremost academic economist of the past hundred years. He made no bones about who was responsible for the current economic crisis and how much worse this one was compared to the last Depression. He pulled no punches about what a monster that Wall Street has become and the need to rein them in.

President Obama had some of the monsters ( I mean the big Wall bankers) to the White House for a chat today, Obama has been upping the rhetoric about Wall Street. They in turn pledged a few billion in small and medium business lending, a fraction of what they paid back to the Treasury. They paid the TARP money back early to avoid any restrictions on executive pay and will doubtless not follow through on any pledges they made to Obama now that he has no leverage over them.

Alan Greenspan made the rounds of the news programs Sunday and expressed his concern for the dual economy. The economy of the big corporations and the rich is doing just fine but the economy for everybody else is doing poorly. Really Al? You spent your entire career keeping wage inflation down. Your policies made the entire middle class into the working poor and now you’re concerned?

The big news last week was that retail sales were up (they’re still way down compared to last year). But a closer look at the numbers underscores Greenspan’s comments, the entire increase for all of the retail sector was made up of increased spending just by people whose incomes exceed 100,000 Dollars. Spending for people in the bottom tier continues to plummet even compared to last year. Those people Greenspan suddenly is concerned about can’t afford a Christmas goose nor healthcare for tiny Tim.