Oh Alan! You ol' devil, you!

Yes, our own dearly beloved former Chief of the Central Bank of the United States of America…more than four score years in age…and still full of mischief!

According to TIME magazine, Alan Greenspan was part of the committee that saved the world following the collapse of Longterm Capital Management in 1998. Then, after the dotcoms blew up…and after the Twin Towers came down…the Maestro saved the world again.

But only a little more than a week ago, it was he who practically destroyed it! That's what some of the papers said. Greenspan, talking to a group in the Far East who paid $150,000 to hear the great man speak, said he wouldn't be surprised to see a recession in the United States before the end of this year. Whether it was a coincidence or a matter of cause-and-effect we don't know, but soon after all hell seemed to break loose in the Asian markets.

Here at The Daily Reckoning we took a philosophical view: All hell has been caged up for a long time; it was bound to break loose sooner or later. But a number of commentators scoured the scene of the break - and found the old man's fingerprints! Mr. Greenspan himself didn't seem to know if he was innocent or guilty. But he immediately moved to put some distance between himself and the pandemonium that seemed to be spreading throughout the world.

"I didn't say recession was probable," he noted carefully, "I only said it was possible."

Then this week, when asked for clarification, he said he put the odds of a recession at one in three - directly contradicting his successor at the Fed, Ben Bernanke, who is telling everyone who will listen that today's prosperity is eternal.

"We are in the sixth year of a recovery; imbalances can emerge as a result," Bloomberg quoted Greenspan as saying.

Bernanke and Treasury Secretary Paulson are ready to say whatever investors want to hear. Yes, the economy is healthy. Yes, it may even be healthier by year-end. No, the trouble in subprime lending will not affect the broader credit market. No, there's no need to worry about last week's market jitters. Prices go up and prices go down; this is just a hiccup in a bull market, not the growl of a bear phase.

"Credit issues are there, but they are contained," Paulson said to reporters in Tokyo during a four-day tour of Asia, speaking of problems in the subprime market. Goldman, his former employer, has seen its stock fall from 222 in February down to 190 this week. But, it's not a concern, Paulson opined. The U.S. financial sector is robust and most institutions won't feel 'a big impact.'

We weren't born yesterday - and, as far as we're concerned, the two government shills are merely 'talking their book.' The last thing they want is a credit crisis. They'll say what they have to in order to avoid it. As for what is ahead, they know no more than we do.

As predicted, the soothing words worked. Hell was backed in its cage yesterday. The Dow rose 157 points. Gold rose too - to $646.

Investors seem content to pin the blame for last week's wobbles on Greenspan…or on the trade deficit…or on subprime mortgage troubles…or on the rising yen. Any culprit will do - except the real one.

The real devil is not an isolated, limited, or containable creature. He cannot be shut out, ignored, or rendered obsolete by sophisticated mathematics. Man is clever…but not that clever. He can invent such wonders as heavier-than-air flight and aged whiskey. But give him a laboratory and he can't stop himself from inventing such nuisances as TV, NegAm mortgages and the Denver boot.

Alas, dear reader, this devil is as much a part of the market system as night is a part of a 24-hour day. Credit expands…and then contracts. Prices go up…and then go down. Sometimes the going is good…sometimes it is not. People are subject to periods of irrational exuberance…and to periods of irrational despair. As the world turns, there are bound to be times of darkness.

Today's question is merely this: Are we looking at the sunset of the credit cycle…or just a passing cloud?

We will find out soon.

*** Kevin Kerr, reporting from the Far East:

"A nasty rumor has been going around that the commodity markets are old hat and will soon go the way of the dinosaur. 'They' have been saying that since I started on the floor almost 20 years ago. I'm here to tell you that not only are these markets stronger and more modern than ever, but there's never been a better time than right now for investors like you to make lifestyle-changing profits, and probably more quickly than you ever thought possible. I know, because I've done it myself!

"What happens when prices and demand for commodities run high over time? Lots of money gets reinvested into making more of that commodity. Pretty soon, you've got more of the resource than you need, just sitting in storerooms. Or how about hot demand that gets so hot there's a correction? Prices for that resource plunge. And again, we make money simply by capitalizing on those moves.

"Over and over again, the cycle keeps playing out over time - especially today, with resource prices trading on more exchanges and more quickly than at any time in history. This may be your best chance in a long time to get very rich very quickly."

*** Feeling lucky? Poor New Century Financial - a subprime lender - is getting hammered by the market and facing bankruptcy and an investigation by the feds. The price of the shares, when we looked yesterday, was below $5. What is remarkable about this is that, in terms of dividend yield, this may be the biggest bargain in the market. The Orange County Register reports:

"If you're an investor who likes stocks that pay hefty dividends, New Century might send your head spinning in disbelief.

"On paper, the Irvine-based mortgage lender has a dividend yield of 51 percent to 167 percent, Register columnist Jonathan Lansner notes.

"In comparison, the yields of Edison International, Exxon Mobil and Procter & Gamble are about 2 percent, General Electric at about 3 percent, and Health Care Property Investors at about 5 percent.

"The yield is calculated by dividing a year's worth of dividends - $7.60, assuming no change in New Century's dividend rate - by the stock price. The price had dropped to $4.56 as of Monday's close, which is why the yield is 167 percent."

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