Jack McHugh from the Big Picture blog:
[Jeremy] Grantham reminds us that there are really only three ways to deal with a broken credit bubble [such as the dot com era's]: 1) liquidate (the deflationary route the U.S. took after 1929), 2) stimulate enough to allow for a long sideways period of repair (a la Japan after 1989), and 3) inflate enough to reduce the real value of the debt burden. He mentions a fourth way out — blow an even larger bubble in another asset class (e.g. housing). Unfortunately for all of us, this was the path chosen by Alan Greenspan when faced with the broken equity bubble of 2000-2002. Instead of allowing our economy to face the music back then, he set in motion (and even cheered) the events that have led us into our current predicament before retiring to the lucrative lecture circuit. Perhaps we should all take the time to pen a note to the Maestro and offer him what golfer Nick Faldo once said to the irritating British press: "Thanks from the heart of my bottom."