Tuesday, April 05, 2005

Greenspan's Oracle on Oil--Enron De-ja vu

Fed Head Alan Greenspan's comments today (4/05/05) to the National Petrochemical and Refiners Association Conference in San Antonio, Texas was classic Greenspan, as he advocated a free market approach to deal with higher oil prices. Butt out Uncle Sam.

Greenspan said:

"To be sure, energy issues present policymakers and citizens with difficult
decisions and tradeoffs to make outside the market process. But those concerns,
one hopes, will be addressed in a manner that, to the greatest extent possible,
does not distort or stifle the meaningful functioning of our markets. We must
remember that the same price signals that are so critical for balancing energy
supply and demand in the short run also signal profit opportunities for
long-term supply expansion. Moreover, they stimulate the research and
development that will unlock new approaches to energy production and use that we
can now only scarcely envision."

With oil making new highs daily and consumers suffering sticker shock each time they go to the gas pump it is not surprising that Greenspan chose the moment to preach his gospel of capitalism to discourage government intervention. It was all too reminiscent of the Fed Head's Enron comments of four years ago, when he again told the government not to meddle in business and create more regulations. Instead let the market sort things out.

As we and others have noted Greenspan has consistently and quite vehemently advocated a draconian free market approach. One modeled after his mentor Ayn Rand.

The Federal Reserve is required by law to be independent and above the political fray. Clearly Greenspan, like many in Washington who are wedded to ideology, think that the law does not apply to them.

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