Where have you gone Alan Greenspan? Your nation turns its lonely eyes to you. Ou...ou...ou...

You saved the world 10 years ago. Can you please do it again?

Oh where, oh where is the committee to save the world when we need it?

Yesterday, the Dow closed below its November low. Down 89 points from the day before. Gold held steady at $976.

And today…gold futures hit the $1000 mark for the first time in almost a year, as investors rushed to the precious metal as a safe haven. This isn’t the first time investors have turned to gold in times of economic woes, and it won’t be the last. If you haven’t added some gold to your portfolio, there has never been a better time. You can get it for just a penny per ounce…see how here.

The jobless benefit rolls edged up to just shy of the 5 million mark. They’ll go over 10 million before this is over.

“US doubles Fannie, Freddie backing to $400 billion,” reports the Washington Post. What numbskulls. They should have cut the two mortgage disaster twins loose long ago. Then we wouldn’t have such a huge hole to fill. Jumbo loans are not covered by Fannie or Freddie. They average, now, nearly 2% points higher than conventional mortgages. Why? Because they reflect the real cost of mortgage money on the free market - not the cost of mortgage funds in the twisted market of implied government guarantees.

But heck…we’re not giving advice to the politicians; they wouldn’t take it anyway.

So, let’s turn our attention back to the man who saved the world.

You know our version of this story, dear long-suffering reader. You’ve heard it so often you’re probably getting tired of it. Instead of allowing nature to correct the excesses of the ’90s bubble in dotcoms, Alan Greenspan and his sidekicks juiced up the biggest speculative frenzy in history. For nearly four years, they kept the Fed’s key lending rate below the level of consumer price inflation. In other words - they were giving money away. No wonder people borrowed too much! They created a new bubble that was not centered in the stock market…but in housing. And since housing is the core asset of most American families, when this bubble popped, it did far more damage than the explosion of the NASDAQ in 2000. In the last two years, homeowners have lost about 20%-30% of their houses’ value. Stock-market investors in the United States are down about 35%. Wall Street, as we knew it, has ceased to exist. And the world is entering the worst recession since the ’30s.

At least, that’s what Alan Greenspan says. Well…what can we say to the man who has done more than any other to create this catastrophe?

Thanks a lot.

*** “Synchronized boom, synchronized bust,” explains our old friend Marc Faber in the Wall Street Journal. Greenspan’s EZ credit terms created a worldwide boom. Now, we pay for it with a worldwide bust.

Isn’t that the way it always works? For every action there is an equal and opposite reaction. For every bubble there’s a pin. And for every politician there’s an envelope with $100 bills in it.

But Greenspan’s successor wants to get his picture on the cover of TIME just as much as his former boss did. He’s determined to beat the bust. If he can do it, TIME will probably give him the Man of the Year award. If he can’t, he’ll probably get the ‘Schmuck of the Year’ award from us.

He’s tried cutting rates. In fact, he cut them more than Greenspan, who stopped at a nominal rate of 1%. Bernanke didn’t stop. Once he had his chainsaw in gear, he just kept cutting…down to zero.

Greenspan didn’t put in jeopardy the Fed’s own balance sheet either. When he was running things, the Fed held only a bare minimum of Wall Street’s junk assets. Now, they’ve got trillions’ worth of them.

Nor did Greenspan resort so nakedly to printing money. The Bernanke Fed has already used “quantitative easing.” Soon, the will embark on ‘inflation targeting’ too. No kidding. That’s what it says in the paper. Bernanke is going to set a target for inflation …say 3%…and keep the printing presses running hot until prices are rising by at least that much.

We never thought central bank management was a science. It certainly isn’t. The theories that guide it are unproven in practice…and unbelievable in theory. Instead, it’s all guesswork, bunkum and dead reckoning. Which is to say, the Fed will hit its target or we reckon the economy will be dead.

Maybe Ben Bernanke is a champion marksman…and maybe he isn’t. We don’t know, but if we were you, dear reader, we wouldn’t stand too close to the target…if you know what we mean.

*** Poor Old Europe. The news is all gloomy. All around the periphery of Europe, countries are in trouble. While the United States bails out banks…France and Germany, at the center of Europe, might have to bail out entire nations.

Ireland is in trouble. And Spain. And Italy. And Poland. And even England may be forced into bankruptcy. British finances are deteriorating at an “alarming” rate, says a report.

We knew it was madness - and we reported it to you, dear reader - when we visited Dublin two years ago. There in the middle of town were retail shops offering the Irish an opportunity to buy houses in Spain…Croatia…or even Georgia (not the U.S. version…Stalin’s birthplace). Property prices soared in Ireland more than in the United States. What you could get for your money was absurd - tiny, non-descript houses in rundown sections of town sold for more than $1 million. The Irish came to believe that property always went up - no matter where you bought it.

It was madness on the way up…and it will be madness on the way down. A friend reports that houses in Ireland are going “no bid” too.

“There’s a guy trying to sell a house for half what he paid for it 3 three years ago…and nobody is interested. He’s stuck,” says our source.

France and Germany may be stuck too. They’ve hitched their wagons to all these marginal countries on the fringe of Europe. Now, it looks like they’re going to have to get out and push.

*** And now for some really disturbing news. Even vice is getting gripped by the downturn. Yes, first we get a report that Playboy Magazine is taking such losses that it may be forced to sell out.

Then, a report circulates that the bordellos of Las Vegas have fallen on soft times. The truckers and tourists who used to frequent them no longer have the dough. The poor girls just sit around…waiting for the phone to ring.

And now cometh from England news that cocaine has fallen in price. It’s now cheaper than beer, says the Telegraph. Either the supply has increased, or the demand has fallen; we don’t know which.

“What’s the world coming to when cocaine is cheaper than beer or wine,” writes a friend. “Looks like we’ll have to change our vices, to economize…”

But here at The Daily Reckoning, we remain loyal to the old-fashioned vices. We’re not going to give up alcohol just because it’s become more expensive than hard drugs. We’ll stick to booze, thank you. Besides, a man who isn’t faithful to his vices is prey to every bad habit that comes along. You can’t trust him.

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