Risk management

Okay, gotta return to that big scale, long time span perspective in pondering this piece by Alan Greenspan in the WSJ on our current mortgage/banking crisis. I certainly don’t know enough about modern history to theorize about this subject, so a critical look at Greenspan’s ideas seems, well, wise.

Key idea: post-WWII expansion-of-exports model of national economic growth in third-world countries, with the developed world being the buyers. Or, from the developed world perspective: exporting jobs (Greenspan doesn’t say this here) and depressing labor compensation rates (Greenspan does say this; I’d use the term “wages”).

Greenspan’s next point: what people in developing countries did with their increased income—they decreased investment, I suspect (G doesn’t say this) because they were buying more stuff = goods (= clutter in Anne-speak) with their expanded income.

This, he says, brought down global long-term interest rates, and the reason we should worry about this is, um, I think, when the price of risk surges…well, you can tell I’m lost….

Still, I’m glad I tried to sort it out….


  1. kayak woman says:

    I dunno. I just see greed as the major issue in the most recent mortgage debacle. 🙂

  2. Sammy says:

    And a measure of fast-talking, combined in some cases with ignorance, I suspect….