Christmas is in the air, and with it come the Scrooges and Grinches of the world to try to spoil everyone's holiday spirit. Here's a tribute to the Grinch Who Stole the Economy, Alan Greenspan, who wrote about the credit crunch in a commentary piece today:

 

"The crisis was thus an accident waiting to happen. If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market. As I have noted elsewhere, history has not dealt kindly with protracted periods of low risk premiums." (Wall Street Journal, Dec. 12, 2007)

 

(with apologies to Dr. Seuss)

 

You're a sly one, Mr. G.

You really are a heel

You told us all to get a great mortgage deal

And then laughed as we slipped on that banana peel.

You're really quite a meanie, Mr. Greenie.

 

You're a rotter, Mr. G.

Without a spotter of kindness.

First you say you couldn't have guessed

That freer credit would create such a mess.

Now today you say

It was an "accident waiting to happen."

You can't have it both ways, Mr. 'Span.

 

You're as charming as an attack dog, Mr. G.

You're full of rotten egg nog

That you are.

Do you see a long hard slog

For the economy to get back in shape

Now that you've lost the Superman cape?

You're really quite a Grinch, Mr. G.

 

No, we're not happy that the Grinch stole our economy. It used to be such a bright and healthy thing. Now, it looks swollen and bloated. And we can't imagine that the current Fed president, Ben Bernanke, is any happier. He keeps seeing ghosts of the Grinchspan who stole the economy – words spoken and written from afar, like these which the former Fed head also wrote today: 

"After more than a half-century observing numerous price bubbles evolve and deflate, I have reluctantly concluded that bubbles cannot be safely defused by monetary policy or other policy initiatives before the speculative fever breaks on its own. There was clearly little the world's central banks could do to temper this most recent surge in human euphoria, in some ways reminiscent of the Dutch Tulip Craze of the 17th century, and the South Sea Bubble of the 18th century."

 

We here at Elliott Wave International couldn't agree more – it looks like Mr. Greenspan has finally got something right. But if you are hoping along with much of Wall Street that the Fed can save the day and find the U.S. economy again, we've got news: the Fed can't change what's already playing out in the credit markets, because it doesn't have the right tools. And the banks that have stopped lending know it best of all. They keep trying to tell the Fed that they don't want any more of the credit that it's selling.

To stay clear of Grinchlike behavior, you would do best not to get caught up in Fed-watching. It can affect the way you invest, which isn't healthy. If you want some Fed-free information to help you get the most out of your future, try a healthy dose of EWI's Financial Forecasting Service. Our analysts depend on prices alone to tell the story of the markets – and we always know a Grinch when we see one. Take the few steps below to read our latest analysis of the credit crunch, the major financial markets, metals, energy and the bond markets.