MISCELLANEOUS

Eve and the Fire Horse is a good movie. So is Caché.

Very funny (and likely accurate) review of Richard Ashcroft's new record.

Alan Greenspan is retiring (from The New Yorker):
Alan Greenspan, who retires this week after serving four and a half terms as chairman of the Federal Reserve, is arguably the most skillful bureaucratic survivor the nation’s capital has seen since J. Edgar Hoover. But unlike the late, unlamented director of the F.B.I., who terrorized his way to longevity, Greenspan practiced the subtler art of ingratiation. His Washington career began when he joined Richard Nixon’s 1968 campaign. After Watergate, he switched his loyalties to Gerald Ford, serving as the head of the White House Council of Economic Advisers. In the summer of 1987, Greenspan was Ronald Reagan’s choice to succeed Paul Volcker at the Fed.

Weathering the Black Monday stock-market crash that came a few months after he took office, Greenspan gradually established his authority. He became the public face of American prosperity: calm, credible, upbeat. Under Bill Clinton, he worked closely with three treasury secretaries—Lloyd Bentsen, Robert Rubin, and Lawrence Summers—to eliminate the budget deficit. Then, barely a month after the 2000 election was resolved, Greenspan endorsed George W. Bush’s plan for top-heavy tax cuts. The plan passed, the surplus disappeared, and, in 2004, Bush nominated Greenspan for another four-year term. “He’s extraordinarily good at getting along with people in power,” William Seidman, a former head of the Federal Deposit Insurance Corporation, has said. “He has the best bedside manner I’ve ever seen.”

Paul O’Neill, Bush’s first Treasury Secretary, has suggested that he and Greenspan secretly hoped to rein in the White House tax cutters. If that’s true, the secret was well kept. But a Fed chairman’s primary responsibility is his conduct of monetary policy, and it cannot be denied that Greenspan presided over almost two decades of low inflation and surprisingly strong economic growth. When he took office, the Politburo still occupied the Kremlin, the Dow was under 3,000, and few people outside the Pentagon and university science departments had heard of the Internet. Greenspan recognized that technology was upending established relationships among inflation, unemployment, and growth. The dramatic rise in productivity that was accompanying the information revolution, he said in 1997, was a “once or twice in a century” occurrence. So instead of raising interest rates, to head off inflation, as some colleagues recommended, he kept them low, and the economy recorded its longest-ever expansion.

Unfortunately, Greenspan extended the experiment too long, allowing a speculative bubble to form in the stock market. After the inevitable crash, in the spring of 2000, the Fed cut interest rates repeatedly, to cushion the impact on the economy. After September 11, 2001, it brought the rate down further—to below two per cent, the lowest level in forty years. By the middle of 2002, it was clear that the recession many expected had not materialized. Yet Greenspan chose to maintain an ultra-loose policy stance for two more years. The public explanation was that the Fed was worried about deflation, which can be even more damaging than inflation. Democrats could be forgiven for suspecting that Greenspan was also giving Bush a hand with the 2004 election.

Just as in the late nineteen-nineties, cheap money led to a speculative boom, this time in residential real estate. In parts of the country—New York, Miami, San Francisco—prices have doubled since 1999. In some neighborhoods, a decent-sized apartment selling for less than a million dollars is considered a steal. “Presiding over one bubble could be seen as bad luck,” The Economist recently noted, paraphrasing Wilde’s Lady Bracknell. “Presiding over two smacks of carelessness.”

If Greenspan remains popular, it’s because his ministrations have made many middle-class homeowners millionaires—at least on paper. But the economy is chronically unbalanced. Like an athlete on steroids, it is ailing from the inside. The United States has a negative personal-savings rate; an immense budget shortfall, which will expand as the baby boomers retire; a trade deficit greater than Russia’s gross domestic product. As a country, we are living far beyond our means. Every working day, we borrow more than three billion dollars from foreigners, notably the central banks of China and other Asian nations, in order to pay our import bills and keep our interest rates low. Nouriel Roubini, an economist at New York University, calls this “vender financing.” The Chinese lend us cash; we buy their goods.

Roubini is among those who fear that America’s profligacy will eventually create a crisis of confidence on the part of its creditors, leading to a run on the dollar, an upward spike in interest rates, and a deep recession. With the Dow recently having popped above 11,000, investors aren’t losing sleep over this scenario, but it cannot be dismissed. In January, the price of gold hit its highest level in twenty-five years, suggesting that some investors are already shifting their money out of dollars and into a safer haven. (Buying precious metals is a traditional way of insuring against future catastrophes.) Meanwhile, Ford said that it was cutting at least twenty-five thousand jobs, the latest in a series of retrenchments by major exporters, and the Commerce Department announced that economic growth slumped in the fourth quarter of 2005.

Greenspan himself, in a research paper that he co-wrote last year at the Fed, has pointed out how the proliferation of home-equity loans, which allow people to cash out some of the rising value of their homes, has impacted the economy. Flush with the proceeds of such loans, many American families have been spending more than they earn. Now that house prices have levelled off, homeequity lending and consumer spending have slowed. If house prices fall, the impact on the economy could be devastating. In a speech last summer at a Fed conference in Jackson Hole, Greenspan referred obliquely to such an eventuality. Talking about periods when financial markets downplay possible dangers ahead, he noted that “history has not dealt kindly with the aftermath.”

Sitting in the audience that day was Greenspan’s successor, Ben Bernanke. A former Princeton professor, Bernanke is a respected economist, but he has no experience on Wall Street and not much in Washington—just a few years on the Federal Reserve Board and several months heading the Council of Economic Advisers. In the coming months and years, events will test the new Fed chairman, and investors the world over will look to him to prevent a panic. Greenspan was a master at this game. Even when his arguments were opportunistic and unconvincing, he delivered them with gravity and élan: his mere presence was reassuring. But a bursting of the housing bubble would have exposed his sophistry, and the suspicion lingers that he is getting out while the getting is still good.



THE OSCARS

Initial thoughts on whom I think should win:

PERFORMANCE BY AN ACTOR IN A LEADING ROLE
Philip Seymour Hoffman - CAPOTE

PERFORMANCE BY AN ACTOR IN A SUPPORTING ROLE
Paul Giamatti - CINDERELLA MAN

PERFORMANCE BY AN ACTRESS IN A LEADING ROLE
Felicity Huffman - TRANSAMERICA

PERFORMANCE BY AN ACTRESS IN A SUPPORTING ROLE
Rachel Weisz - THE CONSTANT GARDENER

ACHIEVEMENT IN ART DIRECTION
KING KONG

ACHIEVEMENT IN CINEMATOGRAPHY
THE NEW WORLD

ACHIEVEMENT IN DIRECTING
BROKEBACK MOUNTAIN

BEST DOCUMENTARY FEATURE
MARCH OF THE PENGUINS

BEST FOREIGN LANGUAGE FILM OF THE YEAR
TSOTSI

ACHIEVEMENT IN MUSIC WRITTEN FOR MOTION PICTURES
(ORIGINAL SCORE)
BROKEBACK MOUNTAIN

BEST MOTION PICTURE OF THE YEAR
BROKEBACK MOUNTAIN

ACHIEVEMENT IN VISUAL EFFECTS
KING KONG

ADAPTED SCREENPLAY
BROKEBACK MOUNTAIN

ORIGINAL SCREENPLAY
THE SQUID AND THE WHALE