February 26, 2004

Visions of Volcker

Buenos dias amigos. Your editor has made it to his hotel room near the beach and managed to find a local Internet connection. I don't have any charming local vignettes to pass along, yet. But the view sure is good. I can see a mountain range directly in front of me, hugging the beach. Puerto Vallarta is sunny and warm. Tourism will have to wait, however. Business first. I won't be blogging much in the next two days, especially tomorrow. That's when the Supper Club meets (my purpose for being here.) I promise, however, to deliver an update this weekend. For now, someone please tell me when Alan Greenspan sobered up. Twice this week Greenspan has directly attacked two of the economy's scared cows, the GSEs (Fannie and Freddie) and Social Security. Maybe the Maestro is getting nostalgic, remembering that all of Ayn Rand's heroes are misunderstood geniuses despised by the establishment, not shameless lackeys for the largest ponzi scheme in history. Still, hat tip to the chairman. He's still mildly delusional. However, if you'd told me six months ago that a public official could openly speak of reducing social security benefits and regulating the ability of the GSEs to expand their balance sheets, and not get stoned by the mob, I'd have been surprised. Of course Greenspan isn't an elected official. He doesn't need anyone's vote. And perhaps this point, he doesn't really care about public opinion. And that, dear reader, is a good sign. Greenspan is speaking candidly of America's serious fiscal problems. Serious yes, but not fatal. They don't have to be. Not that I think that any of our public officials are going to advocate making the tough choices we have to. But frankly, if they don't, events will take on a momentum of their own, and all that we've been forecasting....an acute dollar crisis, a sell off in U.S. bonds, declining standards of living in America for most...will come to pass anyway. But right now, the Greenspan candor and the heckling from Europe is giving the dollar a reprieve. The ECB may well cut rates. Or it could be political posturing. Either way, I view the current dollar environment as a stay of execution...and a chance for those of you who haven't yet taken a position in gold to do so cheaply. No matter what anyone says, --the Fed Chairman, Schroeder, Raffarin, Bush -- the deficit exists. And the debt--the total of deficits, is not getting smaller. The dollar is fundamentally hamstrung by this debt...and the whole culture of consumption that created it. The world's currency markets may be shuffling along to that reluctant conclusion, like a dog on the way to the vet to be put down. But shuffle they must. I'll check in later tonight after markets close with an update. Meanwhile, on a purely personal note, But your editor finds himself embarrassingly confused trying to speak Spanish. I studied Spanish in high school and actually know how to conjugate verbs in Spanish, something I'm appallingly bad at in French. French and Spanish, as well as Italian, are all romance languages. Italian, which I also speak a smidgen of, sounds a lot like Spanish. And in fact, the times I've been in Italy, I can speak in my bad Spanish and usually be understood. But I have to admit, it's all helplessly jumbled now, a kind of an organic Esperanto. Trying to talk with a man in the lobby last night, I found myself saying something like "J'espere hablo espangol per tutti giorni avec todos las personas." Nonsense of course, although it made sense to me. Effort is the main thing, so far. After all, everyone here speaks English. And so my bad Spanish is kindly indulged (I think it's kindly.) My waiter last night was generous with is praise, if candid. "Your accent is very good," he said in Spanish, "But what you say makes no sense." Usually I only hear that about my writing. "Ho capito," I said, "Mais, es beaucoup dificil para mi. Yo queiro parler in espangol, mais las palabras, no son recuerdo." With that, I bid you adios.


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