The Grass Is Always Greenspan

The bottom is starting to drop out of the housing market.

WASHINGTON (Reuters) - Sales of new single-family U.S. homes fell 8.3 percent in August to a 795,000 annual sales pace, its slowest rate in over seven years, while the inventory of homes dropped, a Commerce Department report showed on Thursday.

Analysts polled by Reuters were expecting August sales to fall to an annual rate of 830,000 from July's previously reported rate of 870,000, which was revised to 867,000. The August sales pace was the slowest since a 793,000 rate in June 2000.

Some analysts blamed new, tough mortgage standards for part of the sales decline.

"A lot of people who were close to making deals or actually in contract to buy found it more difficult to get financing," said Michael Bizenov, president of Sterling National Mortgage, Sterling Bancorp in New York.

Meanwhile, the supply of unsold homes is at an 18-year high. All of which is happening while Alan Greenspan is hawking books and sipping cocktails.

Alan Greenspan says there's nothing he could have done about the housing bubble. Monetary levers are too crude to do any good, and the least worst option is to let the bubble collapse on its own and then pick up the pieces afterward.

Maybe so. But that still doesn't explain why Greenspan cheered on the bubble back in 2004.

Greenspan, of course, not only loved the housing bubble, but loved the Bush tax cuts before deciding that they weren't working for the larger economy. Apparently Greenspan the author isn't acquainted with Greenspan the Republican hack.

By contrast, Naomi Klein's new book is really interesting:

Meanwhile, the book that should be in the spotlight is The Shock Doctrine.

It's a brilliant dissection of what Naomi Klein calls "disaster capitalism," an economic philosophy born half a century ago at the University of Chicago under Milton Friedman. It holds that the best time to institute radical free-market policies is in the aftermath of a massive social crisis, such as a terrorist attack, a war, or a natural disaster like Katrina.

Klein shows how the crony capitalists running the Bush administration saw post-invasion Iraq as the perfect proving ground for all their pet free-market policies. The fantasy was that a privitazied and corporatized Iraq would become a free-market utopia that would spread the gospel of the market throughout the Middle East. Democracy would reign, and Halliburton and Bechtel would stand supreme.

After the tsunami in Southeast Asia, there was a land grab. After Katrina in New Orleans, developers tried to eliminate prevailing wage. The plan is seeing disaster as opportunity. And Klein hammered Greenspan on Democracy Now about all of this, including his curious line that we had to get Saddam out because he could have held up the world's oil supply.

Are you aware that, according to the Hague Regulations and the Geneva Conventions, it is illegal for one country to invade another over its natural resources?

Amen.