>Well, I am new at glooming and dooming, so I didn't know that. However,
>the debt explosion in combination with the stock market bubble *is*
>unprecedented, isn't it? I know you are trying to be extra careful about
>predicting anything, but do you see any way that this can resolve itself
>that doesn't involve fairly drastic retrenchment of consumption and
>growth together with systematic defaults and debt writeoffs?
>
>Greenspan seems to think (to the questionable extent that he understands
>what's going on) that it's all OK 'cuz technology (which he knows
>nothing about, not even as a user) will make us free. Do you agree with
>him?
No. Greenspan says this sometimes, and sometimes he sounds nervous. I think he's torn about what to do, not wanting to spoil the fun, but a bit scared that things are a bit wacky. So like any dreamer, AG expresses this contradiction in time, saying one thing one day, another thing the next, or even saying both things in the same speech.
How could this all resolve itself? You could just have a long grinding period of adjustment without a true collapse, like Japan has been going through, or the U.s. went through from 1989-92/3. I also think you have to entertain the possibility that this really is a long upwave of prosperity, so there may be only a minor adjustment ahead. I think the character of the next recession will provide the definitive answer to the longer-term questions (and will show too whether the productivity pickup is a blip or something more real than a blip).
Doug