THE CAPTAIN OF THE TITANIC

would you let the captain of the titanic drive your boat? president bush would. even as 77 year old sir alan was under the knife getting his prostate repaired, the president was answering questions about mr. greenspans future employment prospects. and it seems he will not be added to the ranks of the unemployed anytime soon. even after questioning the presidents economic jobs & growth package, a.k.a "tax cut for the rich", the president still wants sir alan to run the country's money. this endorsement is a bit confusing as the president has replaced every chairman, secretary or advisor who has not fully supported his policies.

criticism of alan greenspans stewardship of the economy over the last few years has been widespread in the aftermath of the stock market bubble, yet most wall street types think he is the best man for the job and that's good enough for the president. "president bush's decision to reappoint alan greenspan as chairman of the federal reserve is like inviting the captain of the titanic back for a second round," says dean baker, co-director of the center for economic and policy research, who faults greenspan for, among other things, managing "to ignore the largest financial bubble in the history of the world." not exactly a glowing endorsement from a usually well respected organization that seemingly has no 'axe to grind' with regards to politics or economic forecasts.

the other end of the greenspan evaluation spectrum would be the presidents comments yesterday issued by ari fleisher, who stated that the president thinks mr. greenspan has done "a very good job stewarding the economy." mr. fleisher went on to say that the president thinks mr. greenspan "has done a very able job as a steward of the economy making certain that we had the proper monetary policies in place."

so, with the fed chief and his cronnies all singing the same tune about the economy and their ability to keep it from imploding, president bushs current support for mr. greenspan seems well reasoned. the fed has been consistently telling the public that the economy is "fundamentally sound" and the "productivity gains" have made the economy much stronger and more resilient. the fed has also made it clear that even if they are wrong about the economy, it has "lots" of "tools" at their disposal to adjust to further weakness. none of the so called "tools" have been tested, but they are confident in their power nonetheless. we will soon see if thats the case, as the economic challenges persist and at least a few economists are now saying a second recession is a possibility.

if we do "dip" again, it will have been in the face of unprecedented moves by the fed to lower interest rates and flood the capital markets with liquidity over the last 2 years. it will also show just how out of touch the fed is with whats really going on and how poorly they managed the economy after a finacial bubble. lastly, if the next leg down is a result of a housing slowdown, a.k.a. the housing bubble popping, it will be greenspans second miss in "bubble spotting" a.k.a. titanic captaining, during his illustrious tenure.

have a grateful day!

larry