We began the summer trying to think new thoughts. We end it thinking the same thoughts we had when it began: what a glorious fin de bubble period it is!

Lesser mortals may criticize Alan Greenspan. That he is a scoundrel we have no doubt. He encouraged householders to mortgage their houses at adjustable rates. He assured that public that mortgage debt was no problem. He held rates below consumer inflation levels for two years - which was like offering an obese man a chocolate éclair. And he enabled George W. Bush's move to federal insolvency - helping him turn a $200+ billion pseudo surplus into a genuine $400+ billion deficit.

But we praise him. We laud the man the way we would a good circus clown; he makes us laugh. Who else would have the greasy gall to lecture the nation about the dangers of debt - when no other human being on the entire planet is more to blame for it than he?

"Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes liquidation of the debt that supported higher prices," said the Maestro last week.

As the Great Mogambo would say: Hahahahaha.

What a mountebank. What a cad. What a shyster.

We love him.

People have to play the roles that are thrust upon them by history. Alan Greenspan might have remained the sensible incompetent that he used to be when he was giving corporations economic advice. But how could that bring the nation to ruin? How would that help bankrupt the American middle-class? How would that help the American empire in its quest for absurdity?

More important, what would we do for amusement?

The Fed chairman is warning the nation. He is telling us how the fabulous credit expansion that he engineered is likely to end. When people grow fearful they will begin to sell out of the "assets" they once expected to go up. A bird in the hand will seem more fetching than the two that were supposed to be in the bushes.

Greenspan does not mention that many, many people are likely to be disappointed, even upset, when their birds get away from them. He does not worry that they may form into a mob, that they may get themselves a suitable length of rope, and that they may go looking for someone to dangle from it. Or that a certain humbug economist with the initials A.G. would be a reasonable object of their attention. He does not mention it, because it is not likely to happen; the poor rubes will never figure it out.

Just look what they're doing now; they too are playing their roles. We wondered why increases in the price of oil had not caused consumers to cut back. Everybody knows that there's little slack in the typical household budget. There are no savings to draw upon, in other words. Most families save only a penny or so for every dollar they make. And yet, as the price of gasoline rose, we saw little let-up in consumer spending. How was it possible?

Cometh the answer in yesterday's financial press:

From last year to this, says a Reuters article, credit card use at convenience stores, where most people buy gasoline, has risen nearly 50%.

A gallon of gasoline cost, on average, $2.61 last week, according to Triple A. Charged to a credit card, it ends up costing the consumer as much as $3, including interest and penalties. It is certainly unwise to put current expenses on a credit card - unless it is merely a convenience and paid off immediately. But that is what consumers must do - unwise things. They have been put up to it by the Fed chairman...and by history itself.

We quoted another passage from the Maestro yesterday. Periods of low-risk perception lead to periods of high loss, he almost said, failing to mention his own role in lowering risk perceptions. In this, he is certainly correct. But what a dull world it would be if people always perceived risk accurately. What a dull world it would be if Fed chairmen really did look out for the nation's money and otherwise kept their mouths shut. What a dull and depressing world it would be if people did reasonable things.

In any case, it wouldn't be our world.

Bill Bonner, with more random thoughts...

*** "Fasten your seatbelt - peak hurricane season isn't until mid-September through mid-October, and we've had two hurricanes hit the Gulf coast already," said Deborah White, senior energy analyst at SG Commodities in Paris.

While the folks in Louisiana, Mississippi and Alabama assess the damage from Hurricane Katrina - some parts of the French Quarter in New Orleans are under 30 feet of water - crude oil and gasoline prices are taking a beating.

Gasoline has hit a record $2.25 a barrel, and crude oil is over seventy dollars - at $70.90. Energy officials have gone into panic mode, Saudi Arabia moved quickly to pledge an extra 1.5 million barrels of oil per day to the U.S. markets...and Bush is talking about dipping into the Strategic Petroleum Reserve.

The reserves would be used to provide refineries a temporary supply of crude oil to replace interrupted shipments from tankers or offshore oil platforms affected by the storm.

*** Our world is delightfully; agreeably mad (here, we return to our old thoughts and welcome them back like a prodigal son.)

Yesterday's news also brought an old familiar item: the future cost of U.S. government promises and commitments to creditors, retirees, veterans and poor people (in present value) has risen to $350,000 per full time worker, says U.S.A. Today.

"Our profligate ways at home are mirrored in Washington and in the global marketplace, where as a society America spends $1.9 billion more a day on imported clothes and cars and gadgets than the entire rest of the world spends on its goods and services. "

Does anyone care enough to do anything about it? Are you kidding?

"A new Associated Press/Ipsos poll finds that barely a third of Americans would cut spending to reduce the federal deficit and even fewer would raise taxes."

Nope. You can't destroy a great empire by being reasonable. And you can't ruin a great people by being careful. History requires both things to happen (otherwise, history would have to stop), so it needs acts of recklessness on the part of the people and their government. That is why we have the war in Iraq, a $700 billion trade deficit, and a $400 billion Federal deficit.

Continues USAT:

"A chorus of economists, government officials and elected leaders both conservative and liberal is warning that America's nonstop borrowing has put the nation on the road to a major fiscal disaster - one that could unleash plummeting home values, rocketing interest rates, lost jobs, stagnating wages and threats to government services ranging from health care to law enforcement."

David Walker, who audits the federal government's books as the U.S. comptroller general, put it starkly in an interview with the AP:

"I believe the country faces a critical crossroad and that the decisions that are made - or not made - within the next 10 years or so will have a profound effect on the future of our country, our children and our grandchildren. The problem gets bigger every day, and the tidal wave gets closer every day."

And here comes the punch line:

"Federal Reserve Chairman Alan Greenspan echoed those worries just last week, warning that the federal budget deficit hampered the nation's ability to absorb possible shocks from the soaring trade deficit and the housing boom. He criticized the nation's "hesitancy to face up to the difficult choices that will be required to resolve our looming fiscal problems."

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.