Meant to write about this earlier this morning - get a lot of my ideas while walking. On the way to work I read Paul Krugman’s post Let’s Get Fiscal where he said Alan Greenspan managed to replace on kind of financial bubble with another:
“…But the truth is that we were looking Japanese for quite a while: the Fed had a hard time getting traction. Despite repeated interest rate cuts, which eventually brought the federal funds rate down to just 1 percent, the unemployment rate just kept on rising; it was more than two years before the job picture started to improve. And when a convincing recovery finally did come, it was only because Alan Greenspan had managed to replace the technology bubble with a housing bubble.”
Started thinking about how we often have to approach a problem by multiple paths at the same time, but there are situations where we take a problem in one area and change it to another - but the problem isn’t really solved, just changed into something else. I guess that makes Alan Greenspan more like a magician - abiet, a bad one.
But it also got me to think about how many other things get “solved” by “simplistic thinking” - and I need to applogise if my thoughts at the end of the day aren’t as clear as they were when it first occured. At times, decisions are made on a strategic level with out really seeing and understanding what’s going on, and I’ve come across that recently with Social Media - CMO’s don’t understand Social Media all that well, and I suspect, Web Analytics, not much better.
What I’m trying to say, is that, at a strategic level, some decisions are made that don’t really make that much sense. And that’s exactly the opposite of the sense I got when I read Paul Krugman’s article today.
In the thick of allowing the financial system to slide over the abyss, policy makers didn’t actually understand the implications of the decisions they made - some of it was idology, but another part was not really understanding fundamentals.
And in way, by saying “Alan Greenspan had managed to replace the technology bubble with a housing bubble ” much of the situation we’re now in is explained - it’s not a detailed explaination - but as a “handle” in order to get a grip on it - it works.
And it reminds me of a book I read a while back called Focusing by Eugene T. Gendlin
Gendlin wrote that sometimes, when we have a lot of complex feelings - there’s an overall one, that when identify it, acts as a “handle” - I think that’s what Krugman’s one liner of Greenspan does - it gets us to see what happened in a way that makes sense - and it’s exactly that kind of clearity that Greenspan and company, lacked - which is why they could rationalize the kind of stuff they did, and why the house of cards that was set up with international finance, fell apart.
But that’s just my take.
I’m going over to the Metropolitan tonight - and that always gets me in a good train of thought - perhaps I’ll have more to say about this later on.
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