Saturday, October 01, 2005

Alan Greenspan admits the froth: "In a series of stunning about-faces, Federal Reserve Chairman Alan Greenspan has just recast his perceptions of the critically important relationship between monetary policy and asset markets. Not only does he finally own up to the perils of America’s housing bubble, but he now concedes that speculative froth in asset markets may well have been a direct outgrowth of the Fed’s policy stance. These revisionist views are in stark contrast to the Chairman’s public stance over the last decade."

Its a heck of a bubble - described as the biggest in history. A collapse of the bubble, the dollar, the US economy and hegemony, combined with unsustainable Chinese growth and the energy crises could lead to a depression that the kapitalist system never recovers from.

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