“When business in the United States underwent a mild contraction … the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. The ‘Fed’ succeeded … but it nearly destroyed the economies the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in breaking the boom. But it was too late … the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed.” — Alan Greenspan
It is rather disconcerting to read Alan Greenspan, grand economic Maestro—as he was referred to by his fellows1—and the man most responsible for the American engagement in Operation Enduring Bubble, speak of “excess credit which the Fed pumped into the economy,” resulting, finally, in an American economic collapse. The collapse which Greenspan wrote of was, of course, the Great Depression beginning in 1929 and extending, mostly, until 1941. This judgment which Greenspan makes about the “excess credit” that directly brought about the Great Depression was made in a 1966 article in Ayn Rand’s Objectivist magazine and subsequently republished in Rand’s Capitalism: The Unknown Ideal.2
What is so disconcerting about the above quoted statement is that Alan Greenspan’s words apply as aptly to current economic conditions as they did to the Roaring ’20s, but with one major difference. The difference is that as Federal Reserve chairman between 1987 and 2006, Greenspan acted even more irresponsibly than the Fed officials he was criticizing. Rather than, “sopping up the excess reserves,” Greenspan added even more, transforming a stock market bubble into a housing and consumer spending bubble of historic and unprecedented proportions.3 It is these “bubbles” that have fed the speculative financial “bubble” that we see deflating at a faster and faster pace every day in the news.
If it is our task to analyze this speculative bubble of financial instruments that threaten to implode the financial system upon which the Liberal Democratic world depends, we should first mention the radical liberal capitalist ideology which seemingly justified Alan Greenspan’s attempt to facilitate the emergence of a “New Economy” that would complete capitalism by banishing “risk.”4
It seems as if it was the desire to “complete capitalism” and his association with those who had the same objective, rather than his technical abilities as an economist that propelled Alan Greenspan to mastership over the global economy. Born in 1926 to a family of Hungarian Jews in the Washington Heights area of New York City (apparently the family originally had the German name Grünspan and simply Anglicized it), young Allen began his career as a musician and performer, studying at The Julliard School during WWII and becoming an accomplished clarinet and saxophone; this led Greenspan to perform in a Jazz band while he was in college at New York University.5 Having progressed through bachelor’s and master’s degrees in economics, in 1950 he went on to Columbia University to engage in advanced economic studies and to be certified as an economist by achieving his doctorate. This did not occur. After studying a short time at Columbia, he dropped out only to be given his doctorate, some 25 years later, by his alma mater New York University without having written the usual requisite dissertation.6 This lack of academic qualifications or persistence in advanced studies did not prevent Greenspan from getting a job as an economic analyst at The Conference Board, a business and industry oriented think-tank in New York City. From there, and until his appointment as Chairman of the Federal Reserve Board by Ronald Reagan in 1987, Greenspan was President of Townsend-Greenspan & Co., Inc., an economic consulting firm also based in New York City.7
It seems, however, that it was his life long association with Ayn Rand, she always referred to Greenspan by the retrospectively apt nick-name of “the Undertaker,”8 which made the career and the mind of Allan Greenspan. It will be the thesis of this article, that it was from such a mind-set of Promethean Capitalism, that our current economic crisis has its origin.
It was in Ayn Rand’s New York intimate circle, the Ayn Rand Collective, that Greenspan found the ideological laissez-faire Capitalism that would be to him more than just an economic system, but rather, and entire new understanding of man. Ayn Rand herself, born Alisa Rosenbaum to an agnostic Jewish family in St. Petersburg, Russia in 1905, emigrated to the United States and became, subsequently, a scriptwriter for Hollywood, playwright, fiction novelist and nihilist philosopher.9 Rejecting both the Idealism of Descartes and Kant, along with the Classical Realism of Aristotle and St. Thomas, Rand unfolded in her various works of fiction, most notably in her novel Atlas Shrugged, an “Objectivism” that relied heavily upon the distinction between a “measurable” world of fact10—which entailed an a priori dismissal of the spiritual and a world of “value” that was not “intrinsic” to things, but which was given to things by rational beings who are pursuing their own interests.11 It is “rational man” pursuing his own interests, as he alone understands them, which is the Promethean man free from all objective claims made upon him or commands coming to him. According to Rand, “Morality is a code of values accepted by choice.”12 Moreover, “reason accepts no commandments.”13 Knowing that the New Egotist (“I am not primarily an advocate of capitalism, but of egoism”) must live with others in order to gets what he wants; he comes to respect his fellow-man as “actual or potential partners in cooperation and trade.
The world system in which this view of the New Egotist can take shape is that of laissez-faire Capitalism, which is, therefore, the ideal human society. Lest we believe that this ideal capitalist society is anything but an orderly human jungle, Rand reminds us that the fundamental right of human beings is the right to life, by which she means the “right to act in furtherance of one’s own life,” not “the right to have one’s life protected, or to have one’s survival guaranteed, by the involuntary effort of other human beings.”14 We can see the portents of this for the economic policy of the New Egotists. The protective role of government defending the common good will be rejected with, “a separation of state and economics, in the same way and for the same reasons as the separation of state and church.” As you can see, all of the above is simply another morphing of Enlightenment Liberalism.
The Problem: Trillions of $ of Phantom Assets
Before we can understand how Alan Greenspan helped to create the economic crisis that we now face in the global economy, we need to identify what exactly the problem is that we are collectively confronting. It has been stated by William McChesney Martin, who served as Chairman of the Federal Reserve for 18 years spanning the administrations from Truman through Nixon, that “The function of the Federal Reserve is to take away the punch bowl just as the party is getting good”; meaning, of course, that its purpose was to ease credit in hard times and tighten it before expansions got frothy. The modus operandi for the Greenspan regime at the Fed, from 1987 to 2006, however, was to keep refilling the punch bowl until it was sure that the party was really underway.15
The current economic problem is very simple to define but extremely difficult to grasp properly. There are today approximately 10 Trillion fictitious US dollars circulating on the planet which large banks are trying to get rid of at any cost in order to limit their own losses. Even at a reduced price, however, these assets remain dangerous traps because there is a very good chance that they are not worth anything and will never recover any value. These are the “ghost” or “phantom-assets” which are no longer capable of being embodied in real assets.16 One very recent example of “phantom assets” that were recognized to be worthless or near worthless is the case of National Australia Bank announcing, on July 31, 2008, a 90% write down (the Australian paper The Age put the write down at 100%) in its $1.1 billion holdings of US mortgage debt. This was an admission that its AAA-rated securities (these are supposed to be the most secure and trust-worthy) are virtually worthless.17 In August 12, 2008, the International Monetary Fund announced that, bank losses from the sub-prime mortgage crisis and the ensuing credit crunch as being $510 billion. In April, the IMF estimated that the total amount of bank “write-downs” would amount to $1 trillion. Since then predictions have crept up, with New York University economist Nouriel Roubini predicting losses of $2 trillion. “It just keeps spreading from one asset type to another, so its hard to know when these write-downs will stop,” said Makeem Asif, an analyst at KBC Financial Products in London.18
What exactly are these “phantom assets”? Most of them are made up of U.S. mortgage loans, U.S. dollars, and U.S. dollar-denominated assets, as well as British Pound Sterling denominated assets. Much of the “reserves” in U.S. currency or Treasury Bonds held by such countries as Japan, China, and Great Britain are part of this cohort of “phantom assets.” They are “phantom,” because they appear to be something that they are not. They appear to be real units of value and future producers of wealth, when, in fact, they are worthless or, at least, worth much less than they appear to be worth. Of course, financially speaking, everything is worthless unless someone else wants to buy it. The daily “write-downs” of mortgage “assets” by major banks, hedge funds, and insurance companies that what they held as valuable assets, are actually worthless or worth much less than they were originally portraying them to be worth. The question for us is, however, “What happens when billions and perhaps, trillions of dollars of assets—real bricks in the economic edifice—have no content?” The phantom structure “stands” until the bricks and mortar are recognized for what they are.
The Fed Primes the Pump: The Incredible Falling Interest Rates
Where did all these excess dollars come from? According to the Libertarian “Monetarist” theory of Milton Friedman, supposedly followed after the inauguration of Ronald Reagan’s “conservative” administration, isn’t the money supply supposed to be closely tied to the amount of growth in the economy, thereby controlling inflation?19
What all commentators agree upon is the fact that under the fiscal regime of Chairman Greenspan, billions upon billions of excess dollars were injected into the global economic system causing the inflation of the Internet-stock “dot.com” bubble, an equity share bubble, a housing bubble, and, finally, thanks to home-equity loans, a consumer credit bubble. Every time one bubble was about to pop and prices return to more realistic levels, meaning that some would find that they did not have as much financial “value” as they thought, Greenspan would lower interest rates thereby buoying up the buying and credit frenzy by making more low-interest loans available through lower interest rates.
Since it is the stock market that keeps the Capitalist credit economy funded, it was the most notable object of Greenspan’s solicitous care. According to William Fleckenstein in his book, Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve, “The stock market bubble, fueled by wild enthusiasm for technology and especially Internet stocks, explodes higher … Greenspan has brought America to the promised land of the New Economy. The Fed prints money, keeps rates low, and blows the roof off the stock market with its Y2K liquidity injections … and there is seemingly no limit to how high stock prices will go. Prosperity reigns supreme. But it is all just a mirage [emphasis mine].”20
The nature of this “liquidity injection,” always, of course, taking the form of loans that need to be paid back—with interest—are simple historical facts; from February 1996 to October 1999, the Federal Reserve expanded the money supply by about $ 1.6 trillion or 20% of GDP (Gross Domestic Product or the total amount of “economic transactions” taking place within the nation). Added to this “printing of money” to solve financial distress or the possibility of financial distress, Greenspan’s Fed, from September 20th to November 10, 1999, expanded the money supply by an estimated $147 billion, which figured as a 14% annual increase. Added to this amount, there was the $50 billion extra that the Fed introduced into the financial system in November and December of 1999, to help tide the banks over any cash needs they might have arising from their customer’s concerns over Y2K.21 The non-event of Y2K did not prevent Chairman Greenspan from cutting interest rates further; in the year 2001, Chairman Greenspan cut rates at every single meeting of the FOMC (i.e., the Federal Open Market Committee, which the Fed’s website defines as “the monetary policy making body of the Federal Reserve System”) during the entire year. Add to this the three interest rate reductions during the three emergency meetings of the FOMC and you have a total of eleven rate cuts for 2001.22 By year-end, the Fed funds rate (i.e., the interest rates the banks will pay for funds and charge for loans) would stand at just 1.75%, a whopping 76% lower than the 6.5% it fetched when the year began.23
We cannot speak of Greenspan’s New Economy or New Economic Paradigm without mentioning the context in which the idea began to be implemented. The 90s, after the breakup of the Soviet Union and the, seeming, end of the Cold War, was the era of a democratic capitalistic utopianism, from which many have not yet emerged. We can remember philosopher Francis Fukuyama in his 1992 book The End of History and the Last Man, “What we are witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such … the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.” Such utopian thinking, the end of the old bust and boom economics as we have known it, is described as the motivating and justificatory factor in Chairman Greenspan’s intellectual choice to ignore the various speculative and stock bubbles he was creating. What made the difference for Greenspan was the increase in productivity which was the result of the computer and the Internet revolution. This was the justification for all of the speculative bubbles.24
It is very difficult to directly quote Alan Greenspan and, thereby, clarify for the reader what the former chairman meant to convey. He, after all, is the one known for the statement, “If I have made myself clear, than you have misunderstood me.”25 The New Economy thesis, however, can be seen to emerge in Chairman Greenspan’s statement to the August 1995 meeting of the FOMC. At this meeting, he justified the unprecedented surge that was going on in the stock market, by citing the increase in technology-facilitated productivity that made for greater business profits. Because of the surge in computer and Internet generated productivity, stocks were actually much cheaper than generally understood. As Chairman Greenspan stated to the FOMC, “There is a major statistical problem. We are all acutely aware that there has been a shift towards an increasingly conceptual and impalpable value added and that actual GDP [Gross Domestic Product, or as the wits would have it, “Gross Data Padding”] in constant dollars is becoming progressively less visible.
All of these intellectual services have historically been written off as expenses in income statements … We are moving towards an economy in which the value added is increasingly software, telecommunication technologies…. So we are getting increasing evidence that we are probably expensing items that really should be capitalized.”26 In other words, stock prices have a right to go much higher because their companies are counting as expenses (e.g., software, technology, etc.) what should be counted as assets. This “irrational exuberance” on the part of Greenspan incited the largest stock market rally that the United States had ever experienced.27 Since the Chairman had herded so many investors away from deposits and money market funds and in to the stock market pool, for more than a decade he was more than leery of suffocating them if he drained out liquidity. Greenspan would not take any monetary defensive action that might negatively affect the stock market. This became known as the Greenspan Put (We will explain what a “put” is, in financial terms, later in the article). The Greenspan Put is the belief by market participants that in times of stock market distress Greenspan was willing to increase liquidity by whatever level necessary to keep the stock market from declining in any meaningful way.28 This attitude towards any real corrections in the stock market is also had by Greenspan’s successor as Federal Reserve Chairman “Helicopter Ben” Bernanke. The name “Helicopter” comes from a speech which Bernanke gave to the National Economist Club in Washington, D.C., in which he used the metaphor of cash dropping from a helicopter to illustrate the ease with which the economy could be invigorated through government fiscal (lower taxes) and monetary (money printing) actions.29
The Abolition of Risk… For Some
The key to understand the New Economy, initiated by Alan Greenspan and the governmental and financial powers of the United States is that it was meant to be an economy in which risk, through the promise of government and Federal Reserve intervention, along with mathematically sophisticated financial instruments that are meant to “hedge” speculative investments, is eliminated. We can loan and speculate without fear of real loss. This is the idea of the New Economy, which is now showing itself to be the phantom or illusion that it always was.
What we must be attentive to, however, is that the New Economy was meant to eliminate risk for the banks and stock brokerages;30 it most certainly does not eliminate risk for the borrower and the non-corporate and non-institutional investor (i.e., the average American). In fact, it seems as if the “new economy” is specifically designed to entrap the gullible, the vulnerable, or the financially desperate into a debt spiral that has no end. Examples of this are in our newspapers every day. Of course, the manipulators of credit are not going to advertise their “financial products” as credit sink holes out of which few people emerge. Man is always attracted to what he sees as a “good,” therefore, there is always something initially appealing about loans that are going to put a limited income individual in a financially risky situation.
If we look at the new mortgages the situation becomes clear. Three types of the “new mortgage” are of particular interest. There are the general ARMs or adjustable rate mortgages. Here, risk is not eliminated but just transferred—perhaps this is the best way to characterize the entire “New Economy.” In this case the risk of rising interest rates, which in a traditional fixed-rate mortgage is a risk the lender takes, is transferred to the home buyer. What the homeowner gets in exchange for taking the risk is a rate initially lower than the going fixed rate (i.e., the attractive “good”). Therefore, at intervals ranging from one to 10 years, the rate is reset to reflect prevailing levels. The initial rate, which has been as low as 1% is sometimes called a “teaser” rate, the implications being obvious: When a person is aiming to get the biggest house possible for the lowest monthly payment, the house appears affordable. When inflation or foreign investors losing confidence in the dollar force cause interest rates to rise, ARM payments will skyrocket.
Two other “new mortgages” that appear to be the best of all possible worlds for the banker are what are called interest-only loans and negative amortization ARM loans. Here the homeowner takes on all the liabilities of homeownership but gets none of the benefits. Interest-only loan payments consist only of interest payments for the first few years. That minimizes the payment initially, but when the initial period is up, perhaps in 5 years, the rate is reset, presumably higher and now the borrower has to start repaying the principal. What started, however, as a 30 year period of amortization has become a 25 year period-30 years of payments in 25 years. All of it makes for much higher payments.
Finally, a variation of the ARM is the Negative Amortization ARM. With this type of new loan, the home “owner” makes a minimum monthly payment with the difference between what you actually pay and the actual scheduled payment added to the balance of the mortgage. Since none of the payments on such loans reduce the principal of the mortgages, the buyers who have these mortgages properties are no better off than renters. They must pay property taxes, insurance, and maintenance; they actually get the worst of all worlds. They de facto rent property from lenders and, yet, get stuck with all the burdens of ownership.31
This “mortgage revolution,” which really began in earnest in the year 2003, is the primary cause of the credit bubble currently popping. How large is this credit bubble? During the years 2003 through 2005, outstanding American mortgage debt grew by $3.7 trillion—an amount almost equal to the $3.8 trillion of total outstanding mortgage debt from the founding of the United States to 1990. In 3 years, Americans had accumulated as much debt as had previously taken over 200 years to rack up.32 Moreover, it has just become public knowledge that 1/3 of new American homeowners have “upside-down” mortgages, meaning they owe more on their mortgage than their home is currently worth.33 “This is an epic event,” says David Rosenberg, chief North American analyst for Merrill Lynch. “We’re talking about the end of a 20 year secular credit expansion that went absolutely parabolic from 2001-2007.”34
Derivatives, CMOs, and Collateralized Debt Obligations: Financial WMDs
Speaking of derivatives, CMOs (collateralized mortgage obligations) and Credit Default Swaps as financial WMDs (i.e., weapons of mass destruction) was not this present writer’s idea. It comes from none other than Warren Buffet, “the Oracle of Omaha” known for his legendary stock picking skills, chairman of Berkshire Hathaway investment fund, and the third richest man in the world. Buffet’s complaint about derivatives contracts was that they had hidden losses that would eventually emerge to implode the financial system.35 On the other hand, we have our harbinger of the New Capitalist Age, Chairman Greenspan taking the contrary position on the question of derivatives, “By far the most significant event of finance during the past decade has been the extraordinary development of financial derivatives…Should they succeed I am quite confident that market participants will continue to increase their reliance on derivatives to unbundled risks and thereby enhance the process of wealth creation.”36
Derivatives, CMOs (collateralized mortgage obligations), and Credit-Default Swaps are ways in which bankers try to eliminate what everyone always thought was part of speculative investments—risk of financial loss. The CMOs or (Collateralized Mortgage Obligations), launched in the 1980’s in the newly deregulated financial markets, are one of the most obvious examples of an attempt to eliminate speculative financial risk. Whereas before CMOs, the risk of a mortgage holder defaulting on his loan was taken by the bank issuing the loan, hence there would be great concern to issue loans only to credit-worthy borrowers, the CMO allowed mortgages to be bought up by thinly capitalized mortgage banks (thereby allowing the mortgage-issuing bank to collect its fees and eliminate all of its risk, collected, packaged into CMOs (this is the process that is called “securitization”) and then sold off on the secondary mortgage market. Since investors would take on the risk of covering for any defaults that occurred within the “package” of mortgages, the CMO issuing bank would also be relatively “risk-free.” Moreover, the investors were told that the investment was relatively risk-free because the junk bonds (issued from subprime mortgages, etc.) that were more risky were stabilized by being included with AAA quality bonds that were based on more trust-worthy and secure mortgages. This is called “tranching” of the mortgage package.
The same “packaging” of debt with the varied quality of issued bonds goes on with credit card debt, student loan debt, car loans, etc. These varied “packaged” (securitized) loans are called CDOs, collateralized debt obligations—they are debt packages that are made into securities.37 According to financial trader and derivative specialist Satyajit Das, “CDO branching is the black art of dissimulation. Investors are told that they are getting access to a ‘diversified’ portfolio of credit risk and are promised highly customized credit risk. It is a very clever ‘spin’.”38 Here everything seems fine for the investors—which include insurance companies, pension funds, and retirement plans—while there are low default rates. When times get hard and rates go up and the risky mortgagee or credit hard holder defaults or falls behind in payments, then the “speculative bonds” upon which our virtual “wealth” is based suddenly appears more like worthless “junk.” The problem for the whole globe is, however, that the main investors in these CMOs and CDOs are top investment banks that stake much of their profitability on these types of financial instruments. Also, many businesses finance their operations through the sale of these types of “junk” or speculative-grade bonds. If the investment banks no longer will buy them, businesses will have to cut back and might be forced into bankruptcy. Presently, at least in Europe, for the past year the sale of these low-quality bonds or debt obligations has frozen up. If no one wants to buy something, it is, financially speaking, worthless.39 If businesses cannot borrow and if banks do not have the assets necessary to issue loans, or have to cut back severely the number of loans that they do issue, then money ceases to be created and you have what can be called a “depression.”
In the whole world of the New Economy, a capitalist economy which attempts to banish risk, perhaps the financial instrument most difficult to “imagine” or even conceptualize is the “derivative.” Derivatives are not assets in themselves, but claims upon financial instruments. They are “bets” upon whether an asset will go up or down in price. Since derivatives are “off balance sheet” and are traded in private transactions and not in markets, no one knows exactly how much value these derivatives have. They allow investors to simulate an investment without actually owning anything. They simply are one way of tapping into the money flowing through financial markets. A derivative “swap” is where two parties agree to exchange “cash flows.” One bank would take on the risk of covering for loans in default in exchange for the interest payments on the loans and fees. The other bank would still service the loan and hold the mortgage.40
Other forms of derivatives are attempts to “hedge” investments or transferring risk by taking the opposite position in the underlying asset. For example, you can buy or “go long” on a steel company stock that you like but hedge the risk by “shorting” or betting against another steel stock you thought was weaker. If all steel stocks fell for some reason, the profits on the short position would off-set the loss on your long position. Your might also buy a “put” option, which would allow you to sell the equity or commodity in the future for a fixed price. If the price of the stock should go down, you would sell at a higher rate than the going price. The Greenspan “Put” was then the ability of stock brokers to have stocks go down but with the knowledge that they would be bailed out, by the Fed or the US government, of any losses they may suffer.
What is intimidating about financial derivatives is how much the financial world has come to depend upon this “betting” and “swapping” in order to finance itself and, of course, the rest of the global economy. The IMF, in July 2007, estimated that financial derivatives had a notional value of $516 trillion. This is more than 10x higher than total global GDP. You are literally speaking of an inverted financial pyramid with a huge wedge of derivative claims standing on a small base of actual assets. With derivative values in the $500 trillion range, rapid swings of $3 trillion to $10 trillion in derivative values are altogether plausible and could inflict enormous damage to the global economy.41 According to LEAP/Europe 2020, this would simply be the inevitable consequence of the “miracle” of the new finance or the “New Economy” which was permitted to create a “financial economy” 1,000x worth the real economy.42 We have an invisible, intangible mountain of debt and “claims” standing over concrete human productive reality.
America 2008: Going Once…
There are serious life-changing consequences in store for an America which has spent the last 20 years becoming the great packager and exporter of mortgage debt. Laissez-faire Capitalism, rather than giving America an expanding property class and economic freedom, is, in actuality, selling itself, piece by piece, to the highest foreign bidder. We are not merely referring to treasury bonds being bought by foreign central banks here; rather, we are speaking, quite literally, of the house next door. On August 10th, it was reported by the New York Post that foreign “sovereign wealth funds” (i.e., government controlled funds that are fed by oil profits and which engage in real-estate investment) were buying up single and multi-family homes that are either for sale at reduced prices or in the process of foreclosure. A sovereign wealth fund would have two distinct advantages over other investors (not to mention—gulp! an American citizen) the depressed value of the US dollar makes the homes a bargain, and sovereign wealth funds have deeper pockets. The sovereign fund of Abu Dhabi (in the United Arab Emirates), for example, has a reported $875 billion in assets that it will be used to invest in distressed American properties. So far prices on bulk sales of REOs, real-estate owned homes, are going for 60 to 80 cents on the dollar.43
Then there is the recent story of Beatrice Brenann. This 88-year-old lady from Bergen County, New Jersey found out that, because she had fallen behind on her payments, her recently refinanced $250,000 home was going to be put into foreclosure. After Mrs. Brennan’s home was put up for a sheriff’s auction, the police came to take her out of her house. Her 60-year-old son, John Brennan stood in front of the door with a .22 caliber shotgun. After Bergen County sent in a SWAT team, Mr. Brennan surrendered to police. He is now in custody.44
- Cf. Bob Woodward, Maestro: Greenspan’s Fed and the American Economy.
- Alan Greenspan, “Gold and Economic Freedom” in Ayn Rand’s Capitalism: The Unknown Ideal (New York: Penguin, 1987), 20ff.
- Peter Schiff, Crash Proof: How to Profit from the Coming Economic Collapse (Hoboken, NJ: John Wiley & Sons, Inc., 2007), xiii-xiv.
- Barbara Hagenbaugh, “The Alan Greenspan Project rocks on” in USA Today (July 16, 2003).
- Cf. Barron’s, “Dr. Greenspan’s Amazing Invisible Thesis” (2008).
- Stephen Ambrose, Nixon: The Triumph of a Politician, 1962-1972 (1989), 136.
- Wikipedia, “Alan Greenspan.” Retrieved August 10, 2008.
- Wikipedia, “Ayn Rand”. Retrieved August 10, 2008.
- Ayn Rand, Introduction to Objectivist Epistemology (New York : Meridian, 1990), 1ff.
- Leonard Peikoff, Objectivism: The Philosophy of Ayn Rand (New York : Meridian, 1993), 20ff.
- Allan Gotthelf, On Ayn Rand (New York : Wadsworth, 2000), 84.
- Rand, Epistemology, 82ff.
- Wikipedia, “Ayn Rand”. Retrieved August 10, 2008.
- Charles Morris, The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crunch (New York : Public Affairs, 2008), 62-63.
- Cf. “Banks: Bleeding value and Hiding Desperation” in Financial Sense (March 24, 2008); Also, LEAP/Europe 2020 (May 16, 2008). For an account of the attempt on the part of Citigroup, Deutsche Bank and Goldman Sachs to sell off their dubious assets, see MarketWatch/DowJones (April 14, 2008).
- Ambrose Evans-Pritchard, “Australia faces worse crisis than America” in Telegraph (July 31, 2008); also, The Age and The Australian (July 31, 2008).
- Yalman Onaran, “Banks’ Subprime Losses Top $500 Billion on Writedowns,” Bloomberg (August 12, 2008).
- Morris, 24.
- William Fleckenstein, Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve (San Francisco : McGraw Hill, 2008), 70-71.
- Ibid., 120.
- Ibid., 27-43.
- Satyajit Das, Traders, Guns & Money: Known and unknowns in the dazzling world of derivatives (San Francisco : Prentice Hall, 2006), 19-20.
- Fleckenstein, 31-32.
- Ibid., 27.
- Ibid., 20.
- Schiff, 31.
- Fleckenstein, 51.
- Schiff, 127-129.
- Fleckenstein, 158-159.
- Cf. Bloomberg, August 14, 2008.
- James Quinn, “Americans need radical surgery to revive country’s economy” in the Telegraph, August 8, 2008.
- Das, 4-5.
- Ibid., 19-20.
- Morris, 39-41.
- Das, 287.
- Ambrose Evans-Pritchard, “Europe’s junk bond market in deep freeze” in the Telegraph (August 4, 2008).
- Das, 271-273.
- Morris, 134-136.
- LEAP/Europe 2020, May 16, 2008.
- Teri Buhl, “Lost Sovereignty” in the New York Post (August 10, 2008).
- New York, TV 4 News (August 13, 2008).