Alan Greenspan, the former chairman of the Federal Reserve, told CNBC in a documentary to be shown Thursday night that he did not fully understand the scope of the subprime mortgage market until well into 2005 and could not make sense of the complex derivative products created out of mortgages.
“So everybody in retrospect now knows that that boom was developing under the markets for quite a period of time, but nobody knew it,” Mr. Greenspan told CNBC’s David Faber. “In 2004, there was just no credible information on that. It wasn’t until we got well into 2005 that the first inklings that that was developing was emerging,” he said.
Mr. Greenspan’s critics have argued that the former Fed chairman expanded the money supply well beyond the growth in the nation’s gross domestic product by keeping interest rates too low for too long.
The Fed’s “easy money” policy created an excess of cash that inflated equity and asset prices, leading to both the technology bubble of the late 1990s and the housing bubble in this decade.
While Mr. Greenspan acknowledges that he could have done something to avert the housing crisis, he contends his hands were tied.
“If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?” Mr. Greenspan said. “When it looked as though we were dealing with a major increase in home ownership, which is of unquestioned value to this society — would we have been able to do that? I doubt it.”
Mr. Greenspan said that if he had taken steps to prevent the crisis, the outcome would have been painful.
“We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said. “And I will guarantee we would not have had a housing boom, a stock market boom or indeed a particularly good economy either.”
Mr. Greenspan also lays the blame on the ratings agencies and the people that trusted their judgment for the proliferation of the mortgage derivatives that were a major part of the current financial crisis.
“What we have created in this world is an aura around the credit rating agencies about certification from them is the Good Housekeeping seal of approval, ” Mr. Greenspan said. “I will tell you the record of a lot of the forecasters of ratings have not been distinguished. They never were.”
The interview is part of a two-hour documentary, “House of Cards,” to be shown on CNBC on Thursday at 8 p.m. and 12 a.m. Eastern time.
–Cyrus Sanati
2009
8:11 am
Greenspan, try Wiki next time
— Posted by Ernie Lynch
2009
8:59 am
So whose fault was it then?
If you read the 1934 edition of Security Analysis it seems Graham is describing the exact same situation, right down to bond insurance being worthless (p185-6) - so how come this was allowed to happen again when it has already been experienced and documented?
— Posted by Fire the Incompetents
2009
9:52 am
greenspan was just part of a system that spun out of control; blaming him is like blaming the skies for raining on a parade…..
— Posted by chris hauser
2009
10:07 am
If there is any single person who can be singled out for extra credit (no pun intended) in creating the mother of all meltdowns, it is this man.
— Posted by williambanzai7
2009
10:20 am
‘Maestro’ in over head, eh? What a surprise. I’m sure he’ll have more honorary degrees coming down the pipe. What a tool for the powers that be.
— Posted by Jim
2009
10:23 am
How did he get his job in the first place? The best thing for everyone’s good would be for him to permanently disappear from the public life. Or face a jail time.
— Posted by MiroWare
2009
10:29 am
The inevitable happened. “A Demon Of Our Own Design”: read it.
— Posted by nick
2009
10:33 am
That’s simply not true. Warren Buffet has been talking about it - or at least hinting about it - since 2002. I’m just glad Greenspan is finally getting the blame.
— Posted by b-
2009
10:33 am
#3: I very much disagree. Blaming him is not “like blaming the skies for raining on a parade”. Anticipating systemic risks is very much part of the Fed Chairman’s job.
There were a number of academics, journalists and bankers I can think of, warning of the preprogramed disaster subprime lending was, of the illusion of massive de-risking through CDOs, of the real estate bubble which bore no relation to past income and affordability ratios etc etc. These warnings were voiced early this decade, not “well into 2005″.
Of course it is very easy in hindsight but the fact is that Greenspan was one of the key people at the helm (a role he clearly relished) and he made a massive mistake. His claims to the contrary are ridiculous and embarrassing considering his intelligence.
— Posted by Thomas
2009
10:34 am
The interesting thing is that Alan Greenspan still doesn’t understand, and with him hordes of mainstream economists, which is why a ton of measures are sieved into the economy at unprecedented cost and waste. Just the bank bailouts will cost more than all off the income tax and all of the mortgage interest payments, combined! Nobody in Washington seems to see that link and instead of focusing on the symptoms one might be much better off by focusing on the causes (too much credit, for one).
If you are interested in off-the-beaten-track research and analysis, please go to my article series at http://www.ireport.com/people/hrtschudi.
H.R. Tschudi, economist and entrepreneur, Vancouver
— Posted by H.R. Tschudi
2009
10:36 am
hve you noticed that greenspan is never talked about on nbc, msnbc etc because is wive andre mtichel reports for them?
— Posted by tom bosco
2009
10:38 am
He is either delusional or disengenuous or he completely misunderstood his role as fed chairman. Take your pick. Direct from his mouth: reputation destroyed.
— Posted by andrew
2009
10:38 am
Alan Greenspan used to support the gold standard, and was against the idea of a federal reserve bank. He was close friends with the pro-freedom Ayn Rand. The, in the 1980s he changed his tune when he started working in the government. So either he sold out to the bad guys, or he tried to bankrupt the system like Francisco D’Anconia from Atlas Shrugged. I think that for him to blame capitalism and deregulation for the current crisis is completely irresponsible… he knows better than this! Could it really be that this was all intentional?
— Posted by sergio
2009
10:40 am
28 years of wrongheaded trickle down “reaganomics” is what got us to this sorry state, of which Greenspan is a prime proponent!
— Posted by Mike Elwell
2009
10:43 am
Greenspan is a fool. He was warned as far back as 1993 about derivatives by Rep. Henry Gonzalez, the Chairman of the House Banking and Currency Committee, and yet Greenspan did nothing because he thought he was smarter than everyone else. The man deserves to be put in jail for his negligence of duty.
— Posted by Subir Grewal
2009
10:43 am
Why are people still asking this idiot questions?
— Posted by Chris
2009
10:44 am
So Greenspan didn’t try to avert the crisis because it wouldn’t have “gone over very well with the Congress”. Guess their response mattered more than giving a heads-up to American home-buyers and investors.
— Posted by Carola Von Hoffmannstahl-Solomonoff
2009
10:45 am
i feel so much better now knowing he was mystified. all i remember from his brilliant years at the helm was “home ownership is good” or some nonsense to that effect. alan suffered from a condition even older than he is: he bought into his own hype.
— Posted by jay
2009
10:45 am
Hauser is a fool…there is always a human to blame. Why are you covering that up? People who blame the “system” are a big part of the problem. One reason these criminals get away with the things they do is because of fools like Hauser.
— Posted by American
2009
10:45 am
Cheap, easy shots at Greenspan aside, he is probably right that there would have been extreme political resistance to deflating or slowing the housing bubble if acknowledged.
The Bush recovery had nothing to brag about other than the booming housing market.
I was a local official in 1996-2000 during the Internet and stock boom. In my community there was a building boom as well. Commercial developers,drunken in their prospects, would plead with us not to take away then goose that laid the golden egg. Then, even I knew that markets were inflated and things would “correct.” I based my sobriety on a historical knowledge that the Fed provided the “sobriety of last resort” and would surely take away the punch bowl to this party that had gone on too long and gotten too wild.
By 2000 we were begging for a recession, it was so crazy in Silicon Valley.
Since 1996, Fed policy seems to have changed. It no longer knows or has the courage to face down society and politicians, drunk on phony asset valuations a false wealth. It no longer leans into the economic wind.
Now the political calculus seems to be, during booms don’t raise taxes, or interest, reduce deficits for fear of slowing growth, and during recessions don’t raise taxes, or interest for fear of blocking recovery.
If the Fed doesn’t provide counter-cyclical sobriety and take away the punch bowl, who will?
— Posted by PaulC
2009
10:45 am
Few Americans know that the Federal Reserve is a private institution that lends money to the US government at interest rates it creates at its own discretion. By definition, it is a travesty to begin with, and for Greenspan to use the Stalag 17 ‘I know nothing…you hear me… nothing!’ excuse is an outrage and a lie.
As the editor of http://tvnewslies.org explained before this economic meltdown ran amok:
The real answer to this question is that the Federal Reserve is like a big Mafia loan shark. It owns our nation in the same way a loan shark owns his “clients”! There is absolutely no difference between the two.
I am certain that the interview blames the mortgagees who were duped into loans they believed would be renegotiable as they ballooned. The criminals at the top never, ever, take the blame for their crimes.
— Posted by Reggie from NYC
2009
10:45 am
What’s not to understand? Giving hundreds of thousands to people with bad credit and fake jobs and expect them to keep up with the payments? They were bad loans it’s jsut that simple. Then the companies sold fake insurance on the portfolio.
— Posted by mortgage undwerwriter
2009
10:46 am
And even then it’s still a hell of a stretch.
— Posted by Boot
2009
10:48 am
Give us back the 3 Trillion wasted on the Iraq war and this all goes away. Greenspans not at fault for the disastrous economy, only the compounding of it. Then again, the fed has too much unfettered, unsupervised power. Congress should have a finance guy too.
— Posted by Wisdo
2009
10:49 am
Uncle Marx was correct after all the advanced China showing the way! What irony!
Better that uncle Sam.
— Posted by Nicholas Xenakis
2009
10:50 am
There seems to be a HUGE White Elephant in the room…
We are NOT in a recession. We are in a Global DEPRESSION. The question is whether this will be a deep or swallow economic depression.
— Posted by Scotchguard
2009
10:50 am
Okay, you have basically admitted that in your belief that deregulation and unfettered free markets were the way to go, you committed the same error that led to the Great Depression and the S&L Disaster. Why not take it a step further and admit that the government should be a watchdog over the financial markets? The free market, for all its value, is too slow to recognize a problem, such as derivatives, housing bubbles, or Bernie Madoff, and it is the responsibility of agencies like the SEC and the Fed to guard the hen house, not to make sure the hen house door remains wide open.
Reasonable vigilance could have protected our nation and the global economy from the crisis that has erupted under your watch, Mr. Greenspan. You were ideologically opposed to government and to government intervention, and that was the key to this whole problem.
— Posted by HD
2009
10:52 am
I suggest Greenspan follow in Robert McNamara’s Vietnam reappraisal footsteps by making a documentary entitled “The Fog of Micromanaging Fiscal Policy”.
— Posted by MARK KLEIN, M.D.
2009
10:52 am
A minority of economists were warning of the impending disaster. Yale’s Robert Schiller for one. We all heard the commercials for no income verification mortgages and equity out refinancing. The economy could have withstood a 20% decline in real estate with a normal sized recession (one being due in 2008 or 2009). Had Greenspan acted, the democrat congress would have screamed, but by recession time, wise fed policies would have won the day and the democrats would have learned a lesson.
— Posted by David Kerr
2009
10:53 am
…. what I meant was that ‘the advanced countries are now all in it now - capitalism is “ripe for Total Change” as Lenin called it.
An Ancient Greek in London
[the disbelievers may read or wartch professor Nial Fergusson (anything but a communist) thesis: 'The Ascent (and perhaps the Descent) of Money']
— Posted by Nicholas Xenakis
2009
10:57 am
Alan Greenspan is either a desperate, big fat liar, or suffering from senile dementia, or both. He needs to have a lie-detector test administered, and then be seen by a team of doctors. He should be prevented from speaking in public until test results are released and a proper diagnosis is agreed upon.
— Posted by joe
2009
10:57 am
Without the false investment grade ratings, who would have bought the mortgage backed securities? Who would have insured them? Why aren’t the rating agencies getting more heat over this?
— Posted by AF
2009
10:58 am
Let’s look at was was done and not done in anticpation of this crisis. Check out the fox news report on youtube:
http://www.youtube.com/watch?v=gzEIMco49AE
Democrats: if you’re in denial, you may not want to watch this!
— Posted by Ken M. In Phoenix
2009
10:58 am
Fire the Incompetents…Ill tell you why it happened again we do not learn from History….Look at the new deal that all the Dems say is what is needed now. DIDNT WORK…still had double digit unemployment and high inflation all through the 30s took a major world war to stop it. Now we want to do the exact same thing in 2009…lets hope it is not a major war that gets us beyond this one, but history show we are due…and again look at history…Govt wanting to scale down military look more inward lets hope not to the point that we become isotationist again like after WW1.
— Posted by Thomas Jefferson
2009
10:58 am
One has to wonder why a “red flag” wasn’t raised in 2005.
“It wasn’t until we got well into 2005 that the first inklings that this was developing was emerging,” he said.
The fat cats setting policies never had to, and probably never will have to worry about their savings plan.
— Posted by Outraged with the "System"
2009
11:00 am
He didn’t understand them?! Man, he was really terrible at his job. Never trust those Ayn Randians.
Also, this statement is just too rich, given that we’re going to have a 10% unemployment rate, massive foreclosure numbers, and bigger declines in home and stock market values than the previous gains:
“We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said. “And I will guarantee we would not have had a housing boom, a stock market boom or indeed a particularly good economy either.”
— Posted by bob
2009
11:03 am
Assigning fault is counter-productive. Understanding the antecedent conditions and events for guidance to help resolve the credit crisis and avoid or ameliorate future problems is invaluable.
Somehow the banks and other critical financial infrastructure must be repaired. The repair should also address the problems in structured finance systems. An analysis and one innovative insurance-based proposal may be seen at: http://insuremyhomeprice.com
In short, it suggests:
1. Government takes risk out of mortgage backed securities by insuring on a mortgage by mortgage basis.
in return
2. Banks lower those mortgage rates to to 3.5% 40 year fixed to reflect risk-free status.
thus
3. Bank mortgage backed security assets no longer must be marked down because they are technically risk-free. Balance sheets recover.
and
4. Lower debt service burden on homeowners means foreclosures drop drastically.
(The payment on a $200,000, 7.0%, 30 year mortgage is $1,331. It would drop to $774 under this plan.)
With balance sheets recovered banks return to more normal operations. The economy starts to recover. With decreased foreclosures the real estate market recovers limiting the actual costs of covering mortgage losses.
— Posted by R. May
2009
11:04 am
Hard to believe that Greenspan is so self-deprecatory. If I recall correctly in 2005 he was still regarded as The Guru. If he had gone to a Republican-controlled Congress and laid out his fears about an irrationally exuberant housing market, does he really believe that Congress (and Wall Street) might not have listened?
— Posted by rita
2009
11:05 am
“Mr. Greenspan said that if he had taken steps to prevent the crisis, the outcome would have been painful.”
More painful than now? Greenspan builds up his straw man argument that the choices were doing nothing or “clamping down.”
There is plenty in between. His regular testimony before congress could have been a venue to warn the public. The fact is Greenspan is an anti-government Friedmanite who believed market players can ’self police’, hah!
— Posted by trblmkr
2009
11:10 am
I suppose they wont ask him why in 1999, he, Robert Rubin and Phil Graham pressured the Congress to allow banks to invest in these “non-understood derivatives” at leverage rates of 30 to 1.
Or why they did so against the analysis of Bjorn Brooks (spelling), a CBO (I think) analyst who outlined exactly what has just happened as to why the above was a very bad idea.
Or why they pushed to repeal the Glass-Steegal (spelling again) act which was enacted in the 30’s to prevent this exact type of financial conflagration from ever happening again.
“My hands were tied! We had to do this!” What a bunch of malarky! CNBC is doing nothing but allowing this incompetent man a platform for airing the reasons why he shouldn’t be blamed!
So much for owning up to one’s mistakes. What an example of how the financial world seems to work.
— Posted by Neal Jettpace
2009
11:12 am
I hope Greenspan is ready for the public “stoning” that MSNBC is about to give him. We all want a “scapegoat” to avoid accountability. EVERYONE is to blame - every individual who bought a home with no way to pay for it, every banker who provided blatantly ill-advised loans, every congressman who advocated OR voted for pushing these loans, every financier who bundled and sold the morgage derivative products, every greedy bank and investor who was suckered into buying them, every citizen who’s lust for more overextended their multiple credit cards, every bank who’s greed gave credit cards to people they knew had too many already, every executive who unashamedly took MILLIONS while leading failing companies and every advertiser for promoting the “you see it, you desire it, you deserve it” lie that seduced the whole country into irresponsibility. Have I left anyone out? Did we really think we were going to be able to dodge the age-old truth - “Your sins will find you out” ?
— Posted by Russell K
2009
11:15 am
Will someone explain to me why home ownership is of “unquestioned value”?
As a renter, I feel like the tax code discriminates against me.
What’s the big deal with owning your own house? Most of those houses are out in the suburbs or exurbs, which are energy-intensive, lack any sense of community, and foster a disconnected car culture and big box store islands in an asphalt sea.
— Posted by William Furr
2009
11:18 am
“We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said. “And I will guarantee we would not have had a housing boom, a stock market boom or indeed a particularly good economy either.”
Soooooo…..he just let that happen after he left, not on his watch. But he knew it was coming, sooner or later, right?
— Posted by Mike
2009
11:22 am
Poor Alan. I bet he got out before it all tanked. Even so. if there had been no credit boom, no housing boom, we wouldn’t now be 10 Trillion in debt and preparing to throw another 3 Trillion down the drain. Empty the prisons of all the small time drug users and poor, and fill them with all these smart guys, they are the real criminals. Nothing will change till we do punishment for theft, which is what this all was. They own the government, so I’m not expecting anything soon. With a two-time Tax cheat who was given the cash upfront astreasury Secretary, or writer in chief of rubber checks, what would you expect but vague assertions of “let’s not do anything rash, like serve the people and the Constitution we swore to do”
— Posted by Tim
2009
11:24 am
Greenspan’s right that he would have encountered huge headwinds if he had argued that the economy needed cooling and raised alarms about credit standards being too relaxed. That is the job, though, of the central banker. He needed to be above politics and be ready, willing and able to administer bitter medicine to preserve the long-term health of the economy.
— Posted by Adam in LA
2009
11:26 am
What Greenspan (and Bush, with his “Ownership Society” nonsense) conveniently ignores is that it’s not “homeownership” at all when you’re leveraged at 100% or more of the house’s value, and that you essentially own nothing if you are liable for debts that you can never repay. Greenspan was supposed to be a steward for our economy, but whether from ideology or willfull ignorance he completely abdicated his responsbility. If Greenspan had taken the blinders off and realized the scope of the potential problem, he could have gone to Congress and explained that subprime mortgages were unreasonably risky and a major threat to the economy. But Wall Street was making tons of money in subprime back then, so he deferred to his overlords and did nothing.
— Posted by Pete
2009
11:30 am
Everybody.
— Posted by Daedalus
2009
11:31 am
Nine out of ten didn’t understand what was going on, and nine out of ten will pay for it.
— Posted by john michel
2009
11:31 am
What could poor Alan have done? It was not like he was the Chairman of the……?
Oh, never mind.
— Posted by Al23
2009
11:33 am
It was Greenspan’s job to know, just like it was Chris Dodd’s, Chuck Schumer’s and Barney Frank’s job to know.
People did know. For example, Harvard Professor Elizabeth Warren, currently overseer of the bailout for Congress, was on Oprah about two years ago and complained that Greenspan had suppressed interest rates far too long, leading to easy money. She warned people to take control of their debt. So even Oprah knew and tried to save the people of the country, while the great Greenspan nodded off.
Employees at banks and lenders understood that poor people were getting mortgages without documentation of their salaries and net worth, and that the rates would adjust up to 9 or12% in a few years, leading to default. Banks told borrowers that they would be able refinance. Wall Street worked to sell the bundled securities before the music stopped. Why not go to the source of these streams that became rivers that flooded us out? Get those signatures off the paperwork and start prosecuting. Work it all the way down to Greenspan.
Perhaps the lesson is to get out into the field and question the lending officers and borrowers, instead of sitting in your nice office reading statistics. It reminds me of the FBI agent in Minnesota who tried to warn her superiors before 9/11 about flight students who wanted to learn how to take off, but not how to land. And no one listened. Disaster ensued.
— Posted by Vicky
2009
11:36 am
Greenspan was absolutely not just a cog in the wheel Chris…he was the engineer! He presided over not one but several bubbles in equities and the housing market. He put his imprimatur on these ‘financial products’, he cheerled them all the way up, and overweening pride never allowed him to admit that he had not a clue what he was talking about. Alan Greenspan was just as bogus and complicit as anyone else on Wall Street or in the government in creating the house of cards.
— Posted by Andrew
2009
11:37 am
“If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?” Mr. Greenspan said.
Buddy, you weren’t hired to be a subservient beauracrat. You posited yourself as Mr. Expert, and sometimes that means you have to tell the truth. What you did was not only unprofessional, but also unpatriotic. By supporting Bush’s ruinous tax cuts for the rich and allowing the easy credit needed by the government to generate the activity to finance them, you have betrayed us and damaged the reputations of “economists” everywhere.
Who knew that you spoke as a cryptic “oracle” because in reality you had no idea what you were talking about?
— Posted by dyinglikeflies
2009
11:41 am
well said, chris. people keep trying to blame a single person/entity (wall st, greenspan, etc.) for this downturn. let’s all stop being delusional and start realizing EVERYONE had a hand in this:
wall st.
greenspan
congress
clinton
bush
rating agencies
THE BORROWER!!
stop pointing the finger at others. it isn’t constructive or value added and deters us from finding a solution to this problem. just listening to the bank ceo testimony yesterday was ridiculous. it was a total blame fest with very little questions around the real issue: how are the banks spending the tarp money and what can we do further to stimulate the economy and fix the capital markets.
— Posted by Frank
2009
11:42 am
The Fed Chairman is supposed to, “take away the punch bowl just as the party gets going.” Greenspan didn’t take it away, he spiked it!
— Posted by Thom Reilly
2009
11:42 am
The fed lowered the rates too much under Greenspan and Bernacle rose them too fast for anyone to be able to drop the variable loans. I will blame the new federal reserve director for taking too long to reduce them again. It was only when people’s credits where ruined and the economy had crashed when Bernacle reduced the rates. at that time the crisis had already taken too many homeowners down and kill real estate confidence.
— Posted by william
2009
11:46 am
WHAT?
All you had to do is look at unsustainable housing price increases and backtrack to the engine enabling it all…. hyperventilating banks, and their gogo blizzard of paper…
That was your job mate!
Even I had this figured out as far abck as the DOTCOM crash…and I am a musician for god’s sake…..
— Posted by FM
2009
11:46 am
We all loved him after 9/11 when he reacted strongly and swiftly to the crisis at hand.. we respected him when he talked about irrational exuberance, now we blame him when we took his money and cheated..
— Posted by Rob
2009
11:46 am
Greenspan was asleep at the wheel. It was his job to know, and, frankly, anybody with any common sense knew before 2004 that the housing market in many areas was getting out of control.
— Posted by Michael Williams
2009
11:48 am
His hands were tied? He was the most powerful financial person in the world and he didn’t even speak up? And yet he blames Congress who he never informed of the situation.
— Posted by Diner
2009
11:50 am
Greenspan repeatedly went on record to oppose the regulation of derivatives. He claimed they reduced overall market risk and that buyers and sellers of derivatives were sophisticated investors who could handle the risks. Contrast that line with Warren Buffett’s apt (in hindsight) description of derivatives as “weapons of mass financial destruction”. Isn’t it ironic that free-market policies promoted by a Randian like Greenspan have led to unprecedented government bailouts to the fatcats and financial institutions that took advantage of them? It’s crony capitalism - privatize the profits and socialize the costs.
— Posted by Patrick
2009
11:54 am
I think that instead of trying to pin the tail on a single donkey a herd mentality may be more appropriate. We can start with Barnie Frank, the heads of Freddie and Fannie, the architects of credit default swaps and the greed and avarice of the players on Wall St. Infortunately, there are not enough tails to go around!
— Posted by Dan Maxwell
2009
11:55 am
Greenspan is good at denial. He had no spine, and printed money for any and all occasions. He knew he was doing the wrong thing intellectually, but had no ethical sense that the pain he was deferring would be worse than the cure someone like Paul Volcker would have prescribed.
So for him to say he could not stop the sub-prime mess is pure unadulterated nonsense.
— Posted by jeff P
2009
11:55 am
It was his job to anticipate major problems and avoid them, not cause them. I totally agree with the 4th comment above. He should get extra credit. Now he’s passing the buck. His behavior is as sorry as his judgement.
— Posted by Gary Noffke
2009
11:55 am
Warren Buffet warned continuously about the derivatives market starting back in 1993 describing them as “a ticking time bomb which could bring down our whole financial system.”
To say everyone was taken by surprised by what happened is revisionist. I think Greenspan was having more fun playing the part of a celebrity than being an economist.
— Posted by Warren D. Mony
2009
11:57 am
“Mystified” is not a valid excuse for person of this supposed stature, intelligence, networks and influence: or maybe he has less of the above than his station would otherwise signify… or he was very willing to be the “tool” of previous administrations who would pay him enough just to add his “badge”and no real substance.
Either way, I have questioned his judgements for at least the past several years and am suspicious of this pseudo- “mea culpa” he is now offering. In some ways coming from him this is worse than the infamous “Twinkie defense”.
— Posted by Hank
2009
11:58 am
> “We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said.”
Oh, puh-leeze. Now FEAR in retrospect, defensiveness by saying it would have been worse. How convenient.
— Posted by Albert Lewis
2009
12:02 pm
In 2005, Mr. Greenspan said that there was “a little froth” in the housing market. I wonder what he thought in 06? What did he do in 07? He must have known that the phoney housing boom was not supportable. Not only were savings down but the “savings” being accumulated in housing equities were being mortgaged to the hilt of phoney inflated values and the proceeds spent in false prosperity. He and no one else in authority had any idea that trouble lay ahead? Mortgage brokers were calling night and day to broadcast the good news that homes were worth far more than their owners had thought so why not take a vacation, buy a new house, a new car? Now we blame them for what the experts, including Greenspan, told them was just fine.
— Posted by Dennis McMahon
2009
12:04 pm
Mr Greenspan’s own quote says it best:
“did not fully understand the scope of the subprime mortgage market”
Well there you go, more incompetence at the top. It was his JOB to fully understand.
— Posted by AmyLee
2009
12:05 pm
Why will no one acknowledge that most sub prime loans contain fraudulent information, that fraud permeated the mortgage origination process from the ground up to Wall Street Executive chambers, and that there is no political will to prosecute “the big guys?” Criminal law provides deterrence, failure to prosecute promotes incentive. The elephant in the room is criminal conduct at the top of mortgage origination firms and investment banks selling securitized debt instruments. Why is there no meaningful prosecution?
— Posted by Tony
2009
12:07 pm
An incredible admission from a supposedly highly sophisticated financial genius. He didn’t understand the scope of the subprime market! The Fed must have the statistical data which would have made this self-evident. What is of real concern going forward was his fear that Congress would not allow or appreciate any steps that would diminish home ownership. His job was to present the facts and the extreme risks presented by the unregulated subprime activity (including a challenge to the rating agencies which were being paid as lapdogs to those peddling this worthless paper) to Congress and the American public. He is a little late with his excuses and it can only be hoped that those following him will not be so timid at the witness table when they go up to the Hill. No more patty cake–the facts please.
— Posted by FER
2009
12:09 pm
Greenspan is in self-denial. He really should read: “Mistakes Were Made … But Not By Me.” Facts have exposed him as a fraud who was very lucky in prior crises. This one was mostly his and history will judge him harshly.
— Posted by Ollie Bland
2009
12:14 pm
lol Ernie…
— Posted by marcin grodzki
2009
12:15 pm
Who cares what he has to say. He more than anyone, the adulated financial oracle by whose lips and mumblings the financial markets hung for all those years, should go home and atone for the havoc that he allowed to develop.
— Posted by piet
2009
12:21 pm
Mr. Greenspan said. “I will tell you the record of a lot of the forecasters of ratings have not been distinguished. They never were.”
Well, Greenspan knows all about undistinguished forecasting…
— Posted by Michael
2009
12:22 pm
piet…..adds, of course you can always blame it on someone else. By the way his record as an economic guru and forecaster at Townsend Greenspan in the 70’s, well let’s not even go there.
— Posted by piet
2009
12:24 pm
Woe be to those who worship at the alter of mathematical models.
Mathematical models look so nice; they produce curves and graphs with all sorts of statistical results that give you great confidence in their truth using words like “confidence intervals”, “correlation” and the like. As any engineer will tell you, if you don’t have all the variables that effect the outcome in your formulas, like the current income of the borrower, the results are garbage. The formulas don’t care that you can’t get current borrower income; if you don’t put it in the results are garbage.
Someone has to read the individual files, not every file but a random sample and if that sample turns up touble a larger random sample and so on–its standard “to the wall” audit procedure.
Poor Mr. Greenspan, and I am afraid the current Fed Board thinks that they can drive the ship by looking at the radar screen and never out the window. When the FDIC really does their job and examines a bank they read loan files.
FDIC does not deserve all the praise that they are getting; they didn’t read the files they relied on mathmatical models. The TARP oversight board paid a consulting firm good money to run mathematical models. If they had gotten started the first of January 5 people would have long ago finished valuing every mortgage in Fort Myers/Lee County Florida, one of the epicenters.
— Posted by T Rankin Terry
2009
12:27 pm
“We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said. “And I will guarantee we would not have had a housing boom, a stock market boom or indeed a particularly good economy either.”
As opposed to the fantastic economy we have now.
This clown and Rubin make me angrier than I’ve ever been in my life.
— Posted by NewAlgier
2009
12:27 pm
We know a priori, by definition, that half of the students in every class are below average (sub prime, if you will). Can you imagine the uproar if every school started sending half their students home graded ‘below average’ even though every parent agreed that the gradings were true in general - its just that their little Billy or Susie has been wrongly singled out? Honestly grading mortgage applicants faces the same problem, especially when they are mostly the very best kind of voters: poor (ie cheap to buy off) and stupid (ie easy to con).
— Posted by I Stirling
2009
12:30 pm
I still don’t understand how he could have approved these products to begin with. Investments are not football games to be gambled on. Earning on the margin is not a right. Hedging your risk is not a right. Try investing in the balance sheet and earn over time like the rest of us.
— Posted by Jay
2009
12:31 pm
Remember that Mr Greenspan was mentored by Ayn Rand, the free market fundamentalist during the mid twentieth century. They palled around together for years. He was deeply steeped in the belief that markets, left to their own, can do no wrong.
I still admire the man, however, I understand that he was am important part of a wave of market worshippers beginning President Reagan (who installed Mr. Greenspan) through to President Bush.
I suspect that Bush’s people encouraged the Fed to maintain low interest rates when they realized the the Iraq War and Bush’s tax cuts were going to be very, very expensive.
— Posted by Richard Navas
2009
12:34 pm
Certain kinds of mortgages and derivatives based upon them make no real economic sense and should not be undertaken by potential homeowners who lack the income to satisfy them, nor should they be invested in by financial institutions; but should marketing them be proscribed and selling them declared to be both non-valid and illegal? Yes!
— Posted by William O'Connor
2009
12:35 pm
What, me, take responsibility? I was only the most powerful man in the world at that time. What could I possibly have done?
— Posted by jimjoyce25
2009
12:38 pm
#4, that’s a big “if.”
— Posted by Jay
2009
12:40 pm
This guy is a joke. He never wants to shoulder any responsiblity for what happened on his watch. The fact is by allowing banks to securitize and create off balance liabilities and assets, he lost control of the supply of money and he allowed banks to create leverage rations way beyond Federal limits.
He never controlled the banks. That is the source of the entire problem.
— Posted by Trader
2009
12:40 pm
What a crock Greenspan…he’s the reason this happened. He. #3, you are living in denial about what was allowed to happen. Why did Greenspan tell the Clinton administration to pay off the debt and then wholeheartedly support the Bush administration putting us into an unprecedented debt? Oh, let me guess…it was for national security? We got attacked so nothing mattered while they pillaged our country’s assets and privatized our resources?
— Posted by James
2009
12:47 pm
Totally self-serving. Greenspan presents a false choice between letting the markets run out of control as they did, or having a nasty recession with high unemployment.
How about responsible regulation of the mortgage market? The Fed could have made liar loans, interest-only loans and negative-amortization loans harder or impossible to get. Tell me what purpose those kinds of loans serve. Without buyers using those loans to stretch beyond what they could afford, the bubble wouldn’t have been as severe.
And it wasn’t exactly rocket science to tell that a bubble was forming. In June 2004 — two years before prices peaked — a Wall Street Journal graphic showed that the historically close relationship between median household income and median housing prices was breaking down, with prices surging ahead of incomes.
That was not long after the Maestro endorsed ARMs, at the worst possible point in the rate cycle — after a roughly two-decade decline in interest rates.
Do you think that perhaps a mortgage broker or two might have mentioned Greenspan’s endorsement of ARMs to prospective home buyers as well as homeowners looking to refinance? Thus enticing people to borrow more and make the bubble even bigger.
— Posted by Ann Arbor
2009
12:56 pm
“While Mr. Greenspan acknowledges that he could have done something to avert the housing crisis, he contends his hands were tied.”
The problem with Washington these days is that they’re never willing to man up, accept their faults and take responsibility.
As Russell Peters best puts it, “Be a man!”
— Posted by Frustrated
2009
12:57 pm
Mystified? Just a euphemism for “clueless”. At least he manned up and admitted he didn’t have the character to do what he had to do.
— Posted by pete
2009
12:59 pm
Economists, like meteorologists, can be wrong 100% of the time and still find gainful full-time employment. The rest of us are not as lucky. Mr. Greenspan knew well what he was doing because he was doing that which he was told to do by his bosses. In the future we will come to realize how duped we really were during the 20th century.
— Posted by Quiet Observer
2009
12:59 pm
It seems to me that Greenspan’s comments are rationalization after the fact; an attempt to revise economic history. The Fed’s task (read Greenspan) is to stabilize and foster the growth of the U.S. economy by rational control of the money supply. If Milton Friedman were alive, I think he would take Greenspan to task for his comment concerning Congressional approval. Let the Fed provide an adequate money supply and let the markets allocate that supply as they see fit.
— Posted by Frank P. Diassi
2009
1:01 pm
““If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?” Mr. Greenspan said.”
In 2004/2005, Greenspan’s economic reputation was nearly beyond rebuke, Congress included. He was the one person with the best opportunity to apply the brakes. Yet he did not.
“Mr. Greenspan said that if he had taken steps to prevent the crisis, the outcome would have been painful.”
Painful in 2004/2005 has now become deadly in 2009.
— Posted by CPC
2009
1:06 pm
When Volcker took over the Fed, he tried something novel that beat the WIN (Whip Inflation Now) pins that Jimmy “nut case” Carter authorized. He cranked up interest rates, arresting inflation. This brought on a grueling recession and brought interest rates back to Earth.
If Greenspan had the same courage, he would have done the same thing.
Thankfully, Obama has turned to St. Paul for advice; but it is too late. Perhaps Greenspan will still enough money from book royalties to take a vacation with his wife, Andrea Mitchell, from NBC News…another helpful force in our society.
— Posted by Stuart, Boston
2009
1:12 pm
Greenspan is either a complete idiot or he’s fronting for the banking industry and Wall Street. I have been involved in subprime lending since the early 80’s (what used to be called “hard money” mortgages) and everyone in that business could see the fall coming as early as 2002. The credit and asset quality of the loans we were seeing was getting worse and worse. Who was making those heretofore very risky loans that we used to? Bank of America, Countrywide, et al. It didn’t take a rocket scientist to figure out that the first downturn in the real estate market would be catastrophic. So we started unwinding all of our positions and were 100% out by 2005. This will go down as the biggest, most widespread financial fraud of all time. Yet, the bonuses continue to be paid, our taxpayers funding the lifestyles of financial criminals.
— Posted by Nicholas
2009
1:13 pm
Has Alan Greenspan lost his mind? We’re told Greenspan felt that if he had taken action to prevent the current economic crisis, “we would not have had a housing boom, a stock market boom or…a good economy.” The price paid by the American people for Greenspan’s “good economic times:” A stock market crash, a financial industry in ruins, millions unemployed and ballooning government debts and deficits for years to come. It’s hard to believe that a man with such twisted thinking served as Fed Chairman for 18 years.
— Posted by S.M.Harvard
2009
1:17 pm
We can take heart that we will not have to listen to Greenspans drivel every night on the financial networks. He is fully discredited. Probably a nice guy but as it turns out his years of Greenspeak were drivel. There should be a law passed banning anyone who ever worked on wall street from working for the government. PS: I bought his book. It was retired to the fireplace.
— Posted by Roamer
2009
1:18 pm
Stuart (1:06), the Whip Inflation Now buttons were from Jerry Ford, not Carter.
Also, Carter was the one who appointed Volcker to the Fed, so perhaps Carter deserves some of the accolades you’re bestowing on Volcker.
— Posted by Ann Arbor
2009
1:20 pm
Once again, this raises the question, “Why are the fingerpointers in Congress not being held accountable for their role in this whole mess?”
It is time to throw out all the angry old men and women in Congress who love to preach to CEOs, then turn around and inflate the next spending bill coming their way.
In 2010 the Democratic Congress will have been in power for 4 years. Given their track record to date, the American people better get involved in the congressional election process if they finally want to see “Change you can believe in”. This group doesn’t have a clue about solving the problems facing the country and I am including the Republican incumbents as well.
— Posted by John Lotka
2009
1:41 pm
Edward M. Gramlich, a Federal Reserve governor who died recently, warned Greenspan and the rest of the Fed about the dangers of subprime as early as 2000. Other governmental officials did the same. See “Fed Shrugged as Subprime Crisis Spread” (NYT, Dec. 18, 2007). Greenspan simply cannot complain he wasn’t warned well in advance. He was, but ignored it. Why? Could it have been he let his personal philosophy of Objectivism get in the way of doing his job? His blind faith in the markets?
— Posted by Garak
2009
1:58 pm
“Greenspan’s right that he would have encountered huge headwinds if he had argued that the economy needed cooling and raised alarms about credit standards being too relaxed. That is the job, though, of the central banker. He needed to be above politics and be ready, willing and able to administer bitter medicine to preserve the long-term health of the economy.”
— Posted by Adam in LA
So right. And Greenspan could have easily increased margin rates to restrain the dot.com, irrational-exuberance bubble.
Poor baby. It was out of the control of one of the top government overseers of the economy? Blame game for his failures. Have a look here for why leaders screw up: http://online.wsj.com/article/SB123438338010974235.html?mod=mostpop
— Posted by Robert Atlanta
2009
2:01 pm
Is this yet another attempt to redeem his record by blaming others and claiming he didn’t know?
This man was all for deficit reduction when the powers that be wanted deficit reduction, then he was for tax cuts when the powers that be wanted tax cuts.
There is a saying that he who pays the piper calls the tune. We now see he wasn’t so much a maestro and is instead a minstrel.
Can’t he just leave the stage at his age and comfort himself with all the money he makes with his books and speaking fees instead of trying to resurrect his reputation?
— Posted by tq
2009
2:01 pm
I’d like to know if Mr. Greenspan would mind taking a lie detector test.
It was amazing that so many economists and government leaders were worshipping him while he was in office.
— Posted by Luan Do
2009
2:16 pm
just hope he was fully invested during the meltdown and had some money with madoff as well
— Posted by dave
2009
2:22 pm
It is too bad that Mr. Greenspan, and too many of the financial types, appear spend their time in the drawing rooms and parlors with Ayn Rand and similar types.
It would be much better if the leaders of the Fed Reserve came from solid engineering backgrounds. Real system engineers do their management activities by “walking around and talking to any and all real workers, and kicking the tires as needed.” Then they raise their voices and ask questions of anybody who has information that needs to be acquired and evaluated. What is the worst thing that can happen to such a system engineer? He can lose his job. So what; his integrity is intact.
“…his hands were tied”. So, Mr. Greenspan seems to imply that if he really did his job, he would have been fired by the President or completely shunned by the powers in the US Congress? So what? He seems to be implying that he had neither the knowledge, wisdom, nor fortitude for the Fed Reserve Chair job.
— Posted by Gabriel
2009
2:29 pm
Greenspan also supported the Bush tax cuts that resulted in enormous deficits. He said he thought that Congress would cut spending so as to avoid the increase in deficits, as if he did not know how Washington works.
Greenspan had one purpose and that was to keep the bubble going so as to get GWB reelected in 2004 and keep the Republicans in control of Congress. To do that he went against all his responsibilities as the Chairman of the Federal Reserve and betrayed the American people in the process.
They probably had to spend hours cleaning up all the green slime he left behind after the interview.
— Posted by John C
2009
2:37 pm
If you read Greenspan’s self-celebratory autobiography, you will note that “derivatives” are rarely mentioned, and when the word or concept does pop up, his remarks are mostly laudatory. Greenspan repeatedly observed that either you don’t recognize a bubble until afterward (notwithstanding his irrational exuberance remark in 1996) or they don’t exist at all. His “free-market” dogma was defective as well, since he saw no reason not to intervene in markets when they were falling. How many times did the market exercise its Greenspan put during his tenure? The most absurd, of course, being the Fed dropping rates going into the Y2K mania–just as the market bubble peaked. What a mess this man made, and how useful he was for those who made fortunes from his foolishness. For the rest of us, well, too bad.
— Posted by Steve H
2009
2:38 pm
I disagree with Mr. Greenspan about clamping down on sub-prime. If he reads the history of his position, the Fed Chairman has in the past made unpleasant decisions. The decision after WWII not to support T-Bill interest rates was very controversial at the time. Why do you think his job was created so independent of political pressure. I can only think that he lasted so long because he kept his finger in the air for changing political winds.
The point about rating agencies is spot on. All of them have been peddling their Good Housekeeping seal for far too long. The best financial minds don’t go to those companies and it shows. What they need is an oversight board similar to what the accountants have in place with Government representation.
— Posted by mbi
2009
2:44 pm
When people call someone an “Oracle” and follow him blindly and he turns out to be just as ordinary as any of us, who is at fault? Oracle?!
— Posted by Surya
2009
2:46 pm
The wizard Greenspan mystified by the sub-prime market?
What “bubble” was he living in all those years he was pushing Milton Friedman’s untennable ideas about “endless expansion”?
— Posted by jimmyaj
2009
3:10 pm
I find some of these comments to be fantastic. They prove that hindsight is 20/20, and the vision of the people in the midle of a storm is not.
— Posted by Leon
2009
3:14 pm
While Greenspan is correct that he would have run into congressional resistance if he had tried to suppress the “subprime market”, he is wrong (and knows it) that the only way he could have stopped this would have been by “clamping down on the American economy, thereby generating a 10 percent unemployment”.
How about limiting the leverage of Wall Street? How about not allowing the multi-trillion dollar Credit Default Swaps market to remain totally unregulated? How about allowing suprime lending, but with some standards (i.e., some down payment, proof of income)?
None of the above would have resulted in 10% unemployment - but would have avoided this once-in-5-lifetimes catastrophe.
One thing is certain: he is proven that is not, nor never was, a “Maestro”.
— Posted by Scott
2009
3:32 pm
The ancient Greek historian Thucydides summarized the whole matter here in exactly three words (five in translation):
“…For men make the polis…”
- that is to say, civilization - where “men” means roughly speaking “courageous individuals.” It was not only Greenspan at fault here: he was the Emperor with New Clothes — and we were the crowd.
— Posted by MV
2009
3:42 pm
The Maestro….. of DENIAL.
Greenspan can’t even keep his story straight. During the boom he said MBS were good things, since then he’s said he had NO IDEA they were bad, now he’s saying he knew in 2005 there was a problem. Next week he’ll be saying his dog told him to do it. It’s so sad seeing all this weaseling and blame-laying coming from an Ayn Rand disciple.
Al baby maybe it’s time for you to toddle off to the rest home and stop getting in front of cameras reminding us what an IDIOT you were. Sip MaiTais on a beach somewhere on a banker’s tab and just forget about the mess you made. I love a couple of your quotes I hope it haunts you for a long time:
“There is no perpetual motion machine which generates an ever-rising path for the prices of homes.” - Alan Greenspan, PhD thesis 1977
“The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.” -
Alan Greenspan
— Posted by Vicente
2009
3:53 pm
Volcker was vilfied for creating the recession which brought an end to stagflation. As some one else said, it’s a hard job, but you’re supposed to do what’s right even if it causes you to be unpopular.
— Posted by Phil
2009
4:27 pm
Greenspan didn’t understsnd the subprime market?
How come the Chairman of the Fed whose job it was to understand it didn’t and people on web boards did?
Seems to me that Greenspan is a TOTAL INCOMPETENT. Perhaps that is why his Doctoral thesis is under lock and key and why he as fired from a job as an economist.
He should pay back all the salary paid to him as he was operating under false pretences i.e. hanging out his shingles as a competent economist which he clearly was not.
— Posted by Fire the Incompetents
2009
4:32 pm
Greenie is so full of it. There was a popular motley fool article in 2004 detailing the subrime market including all the pretty little acronyms and what was going to happen during the fallout (google news search it if you want).
That is just main stream though…I remember surfing the blogs in late 2003 talking about the real estate bubble becoming huge. It was well know what was happening. Our leaders can claim ignorance but the truth is that they failed to stop the train because they were all on it…profiting blissfully.
— Posted by Liar Liar Pants On Fire
2009
4:36 pm
He is ultimately responsible for global economic financial meltdown.
— Posted by Kostyk
2009
4:44 pm
But I thought this was a non political position so why was he so worried about Congress’ reaction. It was his job to put the brakes on what even he couldn’t understand. In other words these were off the book instruments being used.
All of these “booms” turned out to be pretty empty and just like that we are running on empty.
Unfortunately, our next “boom” is going to be in the health industry which has hyperinflation and there is just no other explanation for skyrocketing costs of insurance and medical costs.
— Posted by sbvbj
2009
4:53 pm
Someone knew. See:
http://www.ethicalmarkets.com/wp-content/uploads/2008/12/financialbailoutcomment1.pdf
— Posted by George
2009
5:04 pm
In Canada we didn’t have the same run up or run down in housing prices. Why? You are actually required, by regulation, to put a minimum of 5% down and buy mortgage insurance if you put down less than 25%. And we didn’t have any of this sub-prime nonsense. And if you walk away from your mortgage, the mortgage holder will come after you for the full amount owing if the house sale doesn’t cover it. We have REGULATIONS to prevent predatory lending and to ensure the banking system doesn’t collapse. Well done USA!
— Posted by craig c
2009
5:05 pm
Oh I forget - you don’t get a tax deduction on your mortgage interest - why should home owners get a break and not renters? Completely unfair tax code that helped make the bubble a little bigger.
— Posted by craig c
2009
5:27 pm
Alan Greenspan fanned the flames, by keeping interest rates lower, and then joined Paulson & Co (the hedge fund not the former Treasury secy) to bet against the mortgage bubble, giving the fund a stellar 2008. Unbelievable! This guy needs to be called out for a Congressional hearing.
— Posted by Undisclosed
2009
6:07 pm
Mr. Greenspan’s major premise is faulty:
Home ownership is the ultimate good.
The feeding frenzy and huge pricing bubble that this premise has spawned is to blame for many of our woes.
Why should families go into hock to support inflated housing prices?
Isn’t the foreclosure crisis pointing to the conclusion that many of us only “owned” our homes in name, but not in fact?
One of the main inducements to own was the historic perception that a demonic landlord couldn’t toss one and his family out into the streets.
But isn’t that exactly what is happening as variable rate loans are recalibrated?
Renters that will have the last laugh, as prices deflate, they retain their credit ratings, and they get even more for their money.
— Posted by Dr. Gary
2009
6:19 pm
“They probably had to spend hours cleaning up all the green slime he left behind after the interview”
You know that’s just how I think of Greenspan, this vile old lizard dripping slime everywhere as he tries to defend his actions and deny that he operated on behalf of some group other than the American people.
If Greenspan had any intelligence at all he would slink off to die quietly rather then remind us who he is and what he did.
I recommend that the Government passes a law allowing for the tarring and feathering of those responsible for this debacle.
Because Greenspan postponed the necessary end of cycle correction for the benefit of dotcom IPO underwriters and then inflated a new [housing] bubble, we now have a much bigger crash in which companies who would have survived a normal cyclical correction will file for bankruptcy taking their employees jobs with them.
— Posted by Lizard Watch
2009
6:23 pm
P.S. Pehaps someone could post Greenspans address so that the unemployed who followed his advice on mortgages can drop by and tell him how they feel.
Some young people approached him at a book signing to [politely] try and engage him in dialogue what he had done [to their futures}. The vile old lizard did not deign to acknowledge their approach, but rather continued signing his personbal money spinner books all the while refusing to acknowledge their presence. This absolutely DISGUSTED me. The video is on Youtube for those who like watching wildlife programs (Lizard special).
— Posted by Lizard Watch
2009
6:41 pm
Greenspan - What a fool!
Uses big words(to congress) to be so pompous and act like he is some scholar. He’s a twit.
1. Why didn’t they track real estate in more real time to prevent this housing bubble. This is the biggest part of the economy!
2. Why, when he recognized a bubble, didn’t he do anything about it.
Moron!
— Posted by Black Swan
2009
7:04 pm
He is full of it. He just wants to shift the blame away from himself. The problem was he always and only looked at inflation. Instead of slowing down the heated economy in 2000 he crushed it. Then as things picked up the banks and brokers that would now (since 1999) get in each other businesses came up with creative financing. With Fed rates low per Greenspan post 9-11, banks borrowed like crazy and there were no constraints put on the vehicles they could sell. So anyone could get a loan without good credit. And of course hindsight is 20/20 and he does not want any blame. Nonsense, he is the main reason for this mess.
— Posted by Peter K
2009
7:28 pm
I second he is full of it. I’ve seen Greenspan present on several occasions through the years and walked away witha person “full of himself.” Major economists warned him about asset bubbles and the Greenspan put, he just continued to “buy his own BS.” The greatest global financial crisis since the depression is directory correlated to his arrogance. Next time, we should have more of a process of decesion making that incorporates a diversity of expert opinion and not another Imerperial CEO screwing up because it is “his way or the highway.”
— Posted by SGR
2009
7:31 pm
Mr Greenspan spoke so eloquently to all those big shots in Washington. Mr Greenspan talked a lot in D.C. ,the problem was that no one understood what he was saying or making any sense. Everything in our society is fake! Take it or leave it for what it is .
— Posted by saby
2009
7:54 pm
it doesn’t matter, we’re all responsible….and we’ll pay one way or another. But listen ,I you have any cash (save it!!!).
— Posted by gw
2009
8:05 pm
Greenspan, more than anyone else, had the power and influence to change things back in 2005 if he wanted to.
— Posted by Roadhog
2009
8:41 pm
Thanks Barney Frank, Jack Reed, Chris Dodd, et al for forcing Fannie Mae and Freddie Mac to lower their credit requirements…..”Fannie and Freddie are fundamentally sound.”….”They are not in danger of going under.”…..”Looking at the financials, they are solid.”…..”You can do more!”
MITT 2012!!
— Posted by Don
2009
8:52 pm
So…now we know who the original Ponzi man was….
— Posted by Anon
2009
8:59 pm
Ad hominem attacks against an aged and misguided bureaucrat aren’t especially productive or illuminating in a crisis as serious as this one continues to be. Greenspan has admitted to the fallacy of his ‘paradigm.’ Sure, too little too late and we are all paying the price but any solution to the housing bubble would have likely been far more illusive than simply raising interest rates (the only tool typically available to the Fed). Additionally, the political resistance that Greenspan refers to should not be underestimated (although here this really does come across as a blatant attempt to change the subject). I’m not suggesting we give this guy a break, but perhaps we are relishing a bit too much in schadenfreud when it comes to Greenspan’s fall from grace.
I would, however, take issue with his claim that home ownership is always the answer. While a politically popular statement, there are certain downsides and risks to the ‘ownership society.’ (See: current mortgage crisis)
— Posted by Joseph
2009
9:06 pm
what R. May said. I had the same idea, and am not opposed to letting the loans go out 50 years. Most homes will sell well before that, so the loans will be paid before that. But the real point is the loans will be paid. Forget this bank bailout crap. Develop a plan that helps homeowners.
— Posted by Cathy V
2009
9:16 pm
I think Greenspan knows he screwed up and is a least willing
to take the rap for his arrogance and stupidity gilded ages die sudden deaths it seems. In the end his vague words
in congressional hearings were not as important as people thought because he really was confused himself. But some
people were not confused, the hedge fund managers and the
private equity fund managers knew how this was all going to
play out years ago. I find it incredible Greenspan didn’t know as well, perhaps blindness in personal or financial matters is
something economist might study during this next depression
— Posted by David Peterson
2009
9:17 pm
Honestly I am not a defender of Greenspan. Honestly! But to be ‘mystified’ by the derivatives lands Greenspan amongst all but a very elite cabal of financial innovators. In an effort to evade congressional and securities regulation (regulation that has grown ever more lax over the past several presidential administrations by the way) some very crafty individuals created some very complicated instruments for whom even the purveyors had limited understanding. To expect an economist, educated in the 1940’s, to truly understand the nuances and implications and risks of CDO’s, credit default swaps, etc. is perhaps expecting too much. At the end of the day he was just he wrong man for the job.
— Posted by Joseph
2009
9:27 pm
Greenspan along with Summers, Rubins, Geithner and all their morally corrupt and wicked accomplices belong in a hellish place for this is but the beginning of the end for not only the economies and the peoples of the US but the world. One day soon money will lose it value entirely and their fantastic personal fortunes will be as worthless as ours; they will then join us in the hellish place and grovel in the filth and human devastation of their making.
— Posted by Bensonhurst
2009
9:31 pm
Yikes, no. 96. A little truth telling. Be careful. That won’t go over too well with people who are programmed to put the blame where their talk radio icons direct them to put it. I remember having to fill out all the WIN red tape reports for my company during the Ford era.
— Posted by James Carothers
2009
9:37 pm
To no. 98: I suppose Greenspan thought “Fed Shrugged” to be an appropriate response a la “Atlas Shrugged”. What’s with this Ann Rand (or however she spelled her name) character anyway? Might not this nation benefit from a good, old-fashioned book burning? Why do so many of these disfuntional conservatives cling to these freakish theories so rabidly?
— Posted by James Carothers
2009
10:08 pm
mentioned Greenspan’s endorsement of ARMs
I remember that comment and I still can’t figure out how it could be justified.
— Posted by Steve J.
2009
10:39 pm
Harry Markopoulos knew that Bernie Madoff was a fraud for years; by the time anyone listened, it was too late. Similarly, plenty of people knew that Bush/Greenspan policies (continued low interest rates, tax cuts, export of jobs, import of goods and credit, little or no regulation of existing financial products and willful blindness regarding new ones) were a bad idea.
Here are some ideas for fixing current mess and preventing future meltdowns.
Stocks and bonds on Wall St.: Stocks, the kind the Puritans used to shame those who violated community norms. Bonds, the kind used to restrain people.
License bankers, just like lawyers and stock traders. While not perfect, when loss of license means loss of livelihood, it’s a tremendous incentive to behave properly.
A legal ban against banks holding off-the-books investment vehicles, sufficiently broad to cover those that now exist and those that may be invented in order to circumvent the rules.
De-chartering: The death penalty for wayward banks.
Big is bad: The “economies of scale” claimed to justify them have become huge diseconomies. Any institution whose collapse threatens the American economy needs to be broken up. It’s also good for competition. Let’s start with Citigroup and Bank of America.
Criminal consequences for individuals: No more Ollie Norths, whose crimes were so outrageous he got away with them. We need laws to transfer ultimate legal and criminal liability to the people at the very top, be they former President Bush or Citigroup chairman Vikrit Pandith.
To paraphrase Barney Frank, a “skin in the game” regulation. A requirement that every intermediary in a sale-of-mortgage chain have a financial stake in a is alot simpler than the CDO’s and mortgages sliced into “tranches”. When a mortgage goes bad, everyone in the chain should suffer some loss.
No more fungible bailout money, allowing banks to blow it on bonuses rather than making loans. Banks need to keep bailout money in a separate set of books, and document that such money is used, not abused.
Restore high marginal tax rates (and ideally, a smoothly graduated income tax). 40% at $100K, gradually increasing in 1% increments to 50% at $1 million, 60% at $10 million, 70$ at $100 million. Will be quite successful at deterring obscene top salaries. Below median income, modest rates. Below poverty income, 0%. (Remember, Richard Nixon proposed a *negative* income tax instead of welfare.)
Require companies issuing stock options to register the date and the strike price with the SEC 6 months in advance.
Restore Glass-Steagall? If we can’t put Pandora back in her box, we need a new box into which we *can* stuff her.
Create “good” banks, not bad banks. Much easier. Leave good loans in good hands, and leave financial toxic waste with its creators. Good bank allows qualified borrowers to refinance homes at 4%, with major subsidies to cover the cost of refinancing. That leaves the bad banks, their bad executives, their bad underwriters, and their bad loans together in one toxic package. Government helps with loan payoff on original loan to the tune of 70% and/or loss of $50K.
— Posted by Aram Hollman
2009
10:46 pm
if you want to see the blood that is on Greenspan’s hands go to So Cal Connected and check out “The State of Foreclosure”. children sell their toys in foreclosure sales.
— Posted by Bill
2009
11:00 pm
This is the guy that actively worked to stymie any regulation or restriction of derivative securities. In addition he is the guy at the helm when congress repealed Glass Stegal in 1999. Did he weigh in on this foolish piece of legislation? Furthermore, he knew that the Investment Banks were hungry for revenue after the tech/telecom bubble burst and who paid the rating agencies BIG money to call a pig a prince rating subprime bonds AAA. He was the master politician at creating a problem and then being the hero for solving it. But for this one he did not realize……….. Hmmm!
— Posted by Blooper
2009
11:43 pm
Man, so many great posts it is very encouraging to see everyone singing from the same hymn book. The boys in Washington think we are all a bunch of suckers, this is obvious. I just wish we could get a million man march going to DC., with symbolic pitch forks, these guys need to know we ain’t playing anymore. To all of you writing in telling it like it is, thanks and keep it up. Great posts!
— Posted by MFA
2009
12:32 am
What if John F. Kennedy had said: I don’t understand mutually assured destruction?
— Posted by Dr Schadenfreude
2009
12:39 am
The consumer had a hand in this crisis because the consumer was not patient enough to wait for a good mortgage; or maybe not smart enough. Who in their right mind would get a mortgage that started out relatively low knowing that it would adjust to an unknown rate? You know the rate is going to increase and not go down; and if it were to go down, it would not be for very long. Also the consumer did not know for certain that he could refinance. Give me a fixed-rate mortgage for five to 10 percent any time. I’d prefer that to an ARM variable rate. I also point my fingers at the stockholder who seem to want an unreasonable profit. Sure, they create jobs because they invest in factories or industries, but they want too much return in too short a time. They need to be more patient.
— Posted by Mario
2009
2:27 am
I am an average civil servant in California, who bought a home for over $500,000 in 2004. Took a first and a home equity for the remainder, with 10% down. My mortgage is only as good as my job, which up until recently included regular COLA. I am in BK due to my falling for the “you see it, you desire it, you deserve it” marketing mentioned previously.We still have equity, but no savings.
From all of my reading on the current economic crisis, I have to agree with economists who say we will not emerge from this recession until all of the “off the books” investment losses are revealed, their losses/values determined and the resulting write downs taken by the financial institutions currently holding them close to their vests. Greenspan colluded with the hyper wealthy at the expense of his country. My failure has been financial illiteracy, but In my humble opinion his failure is tanamount to treason.
— Posted by loveisageless
2009
4:23 am
Greenspan and his entourage didn’t notice that everyone had too much money - since 1998. What the average person was doing with money was more than speculative, it was insane.
As one silly example, between 1998 and 2006 I was finding paper money on the ground all over the country, and I know of others who had the same experience, with one person I know finding a $100 in a field. I recall once finding a quarter, $1, and $5 within a two-hour period of walking around the town where I lived at the time.
In the fifty years prior to that, I’d never found a single piece of paper money, only small change with the very occasional quarter.
The overt attitude among much of the public was that they could have anything they wanted, and they didn’t hesitate to treat themselves.
The Fed and Treasury could have had whatever they wanted as well, including stability, but it was much too easy to keep their mouths shut and instead watch their wages inflate as they pandered to both the politicians and the electorate.
A thorough look at the record will show that economists and journalists alike were in thrall of Mr. Greenspan’s supposed fine-tuning ability. Funny thing - they really thought he could pull off something that no one else had ever managed, or had even claimed was possible.
This was not unlike the widespread belief that a sleepy utility could overnight turn itself into a growth company for the ages - Enron, anyone?
Well, we’re all a lot more rational these days, and will be for a goodly number of years to come. No soft landing this time, guys!
— Posted by Andy Hain
2009
5:04 am
We get the leadership we deserve. Greenspan and his ilk are the end result of a culture that confuses form with substance! The economic morass in which we we now find ourselves is the end result of incompetent form trumping capability based substance in business and political leadership.
— Posted by L Taylor
2009
5:27 am
“Mr. Greenspan said that if he had taken steps to prevent the crisis, the outcome would have been painful.
“We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said. “And I will guarantee we would not have had a housing boom, a stock market boom or indeed a particularly good economy either.”
The good times that we had up until 2008 were because of an economy that was really a house of cards. Greenspan just acknowledged as much in this interview. But wasn’t George W. Bush’s “Ownership Society” based on this?
— Posted by David D
2009
5:36 am
This is what happens when a man who is entrusted with the stewardship of America’s money supply obtains his philosophy of economics at the feet of a 3rd rate novelist and a first class wingnut.
— Posted by David D
2009
6:00 am
So Mr. Genius if you would have taken the steps to clamp down on the crisis, the outcome would have been painful! What in God’s name do you think is happening right now as a by product of your inability to stand up to Congress and Mr. Bush? The housing market has crashed, the stock market is crashing, and the economy is on the verge of collapse. Now there is a stroke of brilliance!
— Posted by John Nieradka
2009
6:21 am
LAMENT OF GREENSPAN THE LEVERAGE KING
(Jack’s Lament, The Nitemare Before Christmas)
WilliamBanzai7
There are few who’d deny, at what I do I am the best
For my talents are renowned far and wide
When it came to surprises in the monetary light
I exceled without ever even trying
With the slightest little effort of my fractional reserve charms
I have seen global investors give out a shriek
With the wave of my hand, and a well-placed moan
I have cut interest rates and swept the very bravest central bankers off their feet
Yet year after year, it was the same routine
And I grew so weary of the sound of irrationally exuberant dreams
And I, Greenspan, the Leverage King
Have grown so tired of the same old free market thing
Oh, somewhere deep inside of the US economy
An emptiness began to grow
There’s was something else out there, far from my Wall Street home
A longing that I’ve never known
I’m a master of risk, and a demon of market sleight
And I’ll scare you right out of your trading pants
To a guy in Kentucky, I was Mister McLucky
But now I’m known as the Subprime Leverage King
And since I was with the Fed, I could take off my head
To recite Keynesian quotations
No banker nor trader could babble like I could
With the opacity of my recitations
But who here would ever understand
That the Leverage King with the capitalist grin
Would tire of his crown, if they only understood
He’d give it all up if he only could
Oh, there’s an empty place in my bones
That calls out for more unknown unknowns
The fame and notoriety that will come through the years
Does nothing for these empty free market tears…
— Posted by williambanzai7
2009
6:25 am
Let me ask a question. Regardless of who , what , where , and why, if Greenspan, and as he mentioned 100 the PHD’s he had access to did not understand credit default swaps, how in the world can we expect a Congress, a Junior President with no business experience, the FED, the SEC, and Donald Duck to put together a resonable
“stimulus package”, that has a snow balls chance in H_LL,
or fixing this.
What no one wants to hear is what that old guy said once,
“survival of the fittest”, which in this case are banks, companies and individuals who DID NOT expect to get something for nothing, and did not compromise their business ethics for short term gain.
Who was that other guy who said” that if it sounds to good it probably is” ?
And now we are supposed to subsidize individuals mortgage payments so they can stay in homes they cant afford, never could afford, and are worth 80% to 50% of the value they were apraised at when the mortgages were
given to them? On top of an unlimited piggy bank for the banks and brokerage houses that created the CDO’s
Yeah Right…………………………………………………………….
Someone pass the magic lamp.
— Posted by DMH
2009
7:50 am
OK WE are all in it together now After reading the comments We need fixes My suggestion for a fix The Fed Rate should not be determined by the Board It should be a built in factor of certain info that determines whether it goes up or down leaving the human element out of it It is also my strong opinion Bush strongarmed Greenspan in holding the rates down This is the key as to why we are where we are now
— Posted by John Kopacz
2009
8:05 am
I think he is much to be admired for his openess & honesty. What I cannot understand is why the purchasers of these securitized housing instruments did not know how dodgy they were, & understand that after a long period of inflating prices corrections usually happen. Deals were done through chains of brokers that did not understand the product.
— Posted by Chris Stuart
2009
8:09 am
As a former Merrill VP and mgr in commercial real estate investments and a former mortgage broker, now retired, if Greenspan didn’t understand the markets, he could have asked a few of us in the business.
We developed a series of policies and procedures since the Great Depression that were designed to manage the risk of lending. For 70 years, it worked. Through this mess low income lenders and smaller banks that stayed with traditional lending practices had traditional default rates. Habitat for Humanity, as a common example, has less than a 1% default rate for 200,000 low income mortgages.
With the Cheney administration, we abandoned virtually all rules and regulations designed to protect the consumer and the country.
This was accomplished with across the board deregulation in virtually all aspects of business through tremendous pressure from executive branch.
Once the subprime lenders realized it was total anarchy on Wall Street it became a free for all driven by raw greed. It was a modern day gold rush aggressively supported by the executive branch.
It was a repeat of the Reagan era S&L disaster which resulted in 747 S&L failing and a repeat of the run up to the Great Depression.
The GOP right wing was spewing propaganda/garbage crediting the tax cuts for the wealthy for driving the economic boom.
The reality is that the tax cut program failed and Cheney did a bait and switch to substitute aggressive deregulation with massive borrowing and spending to drive the economy.
Those who did warn were sent to Siberia, if they were lucky. The message sent out from the White House was loud and clear – it was silence or a political firing squad.
The final chapter to this mess is the awesome GOP propaganda machine, headed by Limbaugh and his $400 million propaganda contract, burying the truth with a tsunami of misinformation.
— Posted by KLeBrun
2009
8:20 am
The bush administration is to blame. It was not an accident
but intentional. They opened up the tap on cheap money to distract the country. Greed and speculation blinded and distracted the people to lessen their concern about Iraq. Hats off it was brilliant.
— Posted by bruce fairbairn
2009
8:20 am
We sure need smarter controls on these con artists.
— Posted by josephjames
2009
8:46 am
If he had had an ouncce of integrity in 2005, once he saw the problem, he should have resigned as a protest against inaction on the part of the President and Congress. That might have gotten people’s attention. Instead, he admits to supervising a collapsing system without speaking out abouut it (except for the “irrational exurberance” remark.
— Posted by BE
2009
9:18 am
“They probably had to spend hours cleaning up all the green slime he left behind after the interview.
— Posted by John C”
Holy cow, that gave me a good laugh this morning. Thanks.
— Posted by Mike
2009
9:34 am
In CNBC’s House of Cards report, the final word was Mr. Greenspan’s. He essentially shrugged and said that regulation wouldn’t stop the misdeeds of the wealthy, so why try ? Incredible.
The small business thief running a car chop shop deserves jail time, but a large corporation contracting out to a mortgage chop shop does not. The elite truly believe that they had no moral obligation to prevent borrowers from imploding. The concept of moral hazard in banking was completely, and conveniently, side stepped by farming out the underwriting an mortgage originating to fly-by-night mortgage companies with no such compunctions or obligations.
— Posted by Disgusted
2009
9:59 am
I am just a lil’ol gal from flyover country and the fact that he “didn’t understand the scope of the subprime mortgage market” absolutely blows my mind.
Let me explain it in simple terms idiot stick; when you loan money to Johnny in math class you want to make sure he has a paper route so that he has the means to pay you back….not to Susie who babysits but spends all her money on makeup and clothes.
Good grief….I look at the next ten years and wonder daily how much more chaotic the world will become due to the bottom line problem of greed, selfishness and a complete lack of embarrassment at not doing things correctly.
Shame on all of us in some small fashion.
— Posted by BK
2009
10:29 am
It should be wiser to keep mouth shout.
Nobody says everything was wrong. To keep both eyes on unemployment it was the right thing to do, in a convulsion system.
The prob is: all the economies where not creating value as expected, so it was necessary to provide consumers with a lot of financial instruments to access goods and, unfortunately, this “parade” allowed a huge amount of speculation. The bubble was there and, some how, is still here - look short-selling now.
So, I should say: Mr. Greenspan, avoid to crucify yourself.
Keep your mind clear and turn your focus on solution.
J.F.
— Posted by John Fernandes
2009
10:33 am
All of this finger pointing may server some purpose some where, but not here and not now. What seems to missing in all of this is an acceptance of the responsibility by all of us that we lost sight of the whole thing.
How many of the people on the list of commenters bought in to the housing bubble to “invest in their future”. How many people bought homes knowing that they would never pay them off, or in a tough times never be able to pay the mortgage? How many lenders or real estate people said we can get you qualified, knowing that they would never see it paid off.
The problem is not Greenspan, it is all of us. We have lost the character that our fathers and our grandfathers lived by. Don’t buy it if you can’t pay for it. Don’t buy it if you don’t need it. The main people that will survive this next 10 years of recovery are those that find those qualities that allowed our fathers and grandfathers to survive the last one, 60 years ago.
Maybe there is a lesson to learn that some of us will teach our children to listen to the ones that were there when it happend before. Don’t through out the rules that we put in place when we did the same stupid thing before.
We will make it through all of this, if we stop making the hole deeper, tighten our belts and take the medicine that we all deserve.
— Posted by KJ
2009
11:18 am
this says it all about greenspan - BE posted:
If he had had an ounce of integrity in 2005, once he saw the problem, he should have resigned as a protest against inaction on the part of the President and Congress. That might have gotten people’s attention.
the fed as an institution and its Govenor is supposed to be independent of the federal administration and have integrity - he had and has today -NONE - and was merely an acknowledged shill for rubin and weil’s objectives - nothing else
— Posted by DJG
2009
11:36 am
And these were the people who dictated orders, who knew everything, who imposed their will to the rest of the world.
— Posted by Josephine
2009
11:37 am
Discredited—nuff said.
— Posted by Flip, Baltimore MD
2009
11:40 am
To anyone who would listen, I have always said that Greenspan was a dangerous idiot, who would do anything to keep his job to bask in the limelight and his “celebrity” status. I am sure that he did whatever he was told to do by the last administration. In return, he was rewarded with the Presidential Medal of Freedom in 2005 by Bush. Just like Tenet, I am sure he has no plan on giving it back.
Besides earlier admitting to Congress that he had been operating under a “flawed theory” over the last 40 years (one which any fifth grader would have known), he ought to admit that his personal character has been deeply flawed by unrepentant hubris. The irreparable economic damage he allowed to occur, not only to this country but to the world, by “playing along” with Wall Street and the Bush administration goes far beyond professional negligence.
Even revisionist historians should find his “flawed memory” too much to swallow unless they have changed their craft from history to pure fiction.
— Posted by Frank St. Calire
2009
11:43 am
Mr. Greenspan’s assumption exposes one of the critical flaws of unregulated capitalism: He believed increasing home ownership was a huge benefit to society, and that is correct: our economic structure is given it’s strength and backbone through home ownership, no question. But that home ownership required equity and assumed a growth of that equity. So the equity and the growth of said equity was the real key to our prosperity.
During the huge productivity gains of the 90’s businesses did not reward labor for those gains, but rather directed most of the benefit to shareholders. This did nothing for home ownership or equity of those in the bottom third of the economic pie. To try and get home ownership up for that segment the government promoted it for it’s own sake, not for the sake of equity. Private business was only too happy to oblige this government mandate using the easiest and cheapest way possible: creative and eventually fraudulent financing that was enabled by the government (i.e. Mr. Greenspan) purposely refusing to regulate these markets. This was the “perpetual motion machine” of the economy and almost everyone benefited from it.
Until.
The flawed assumption that home ownership helps society was exposed. The reality is the underlying equity and growth of that equity is what helps our society. So instead of blindly promoting home ownership our government should have been promoting HIGHER WAGES for labor. This would have enabled the same people that are now loosing their homes because of subprime loans that they should have never qualified for or gotten in the first place to actually qualify for a conventional conforming loan using their real wages, not the voodoo numbers the loan brokers put on the applications. Labor would have been able to save for a down payment and actually had some skin the home ownership game.
This brings us to the main flaw: Capitalism as we know it looks for the cheapest and easiest way to make a return and there is a pressure for never-ending growth. Combine that with not only government pressure to achieve a goal but to do so in an unregulated manner and you have the mess that Mr. Greenspan still doesn’t seem to understand.
— Posted by Marco
2009
11:53 am
What is more mystifying is Mr. Greenspan thought he was powerless to stop this train wreck! He was the one of the most powerful Fed chief ever, whose every utterance was parsed for some deep meaning by Wall Street, Congress and the Media. His problem was he did not have the spine to stand up and do the right thing.
— Posted by pradeeo
2009
12:09 pm
People want to throw all of the blame on Greenspan. But it is extraordinarily difficult to decipher how much money the economy needs at any given time. Why were analysts worldwide underpricing risk for so long? Some of the spreads seen right before the crisis began were insane. It is difficult to blame one man when almost all men are guilty of the same thing. I wonder how high rates at the fed would have had to be in order to stop the easy money and inflation of asset prices? People must remember that the fed indirectly influences interest rates on money, they do not have a gun to the head of the banks and investors and people who are actually loaning money out.
— Posted by Andrew Swanson
2009
12:30 pm
The beast is well and truly headed for emaciation. Well done Alan.
— Posted by Flip, Baltimore MD
2009
1:00 pm
It would be interesting to know where he invested his money all these years he knew, without telling anybody else ,we had a major problem brewing.
— Posted by sbvbj
2009
1:06 pm
What would Ayn Rand think of Alan now?
Not in language the Networks allow.
Oracle to to the Globe,
Now beset like poor Job,
Once Sage to whom all did kowtow.
— Posted by Larry Eisenberg
2009
2:06 pm
Is this really a surprise? Remember his comments on the market’s “irrational exuberance” which he then shut up about?
Similarly, Warren Buffett called CDOs “weapons of mass destruction” in appx. 2003 after loosing billions on them, but then in 2007 was trafficking in them again.
See http://www.dealbreaker.com/2007/11/warren_buffett_admits_to_manuf.php
Really smart people making really big mistakes.
So, trying to make sense of all this:
1. People are so greedy they don’t do what’s in their own best interest let alone your or my best interest, i.e. watch your wallet!
2. No free lunch, short or long term.
3. Beware of party ideology, Demo or Repub.
4. See #165: ” Don’t buy it if you can’t pay for it. Don’t buy it if you don’t need it. The main people that will survive this next 10 years of recovery are those that find those qualities that allowed our fathers and grandfathers to survive the last one, 60 years ago.”
Anything else?
— Posted by Jake