Greenspan: I didn't do it!

[we_are_toast]

I was beginning to think those 1% interest rates helped inflate the housing bubble, but now that I know it was a billion Chinese with an annual per capita income of about $4,000 saving all that money, I feel a lot better now.

March 11 (Bloomberg) -- The U.S. Federal Reserve’s “easy money” policies during the first part of this decade didn’t cause the housing bubble, former Chairman Alan Greenspan wrote in the Wall Street Journal.

A surge in growth in China and other emerging markets led to an excess of savings that pushed global long-term interest rates down between early 2000 and 2005, Greenspan wrote in an article. That caused mortgage rates and the benchmark Fed-funds rate to diverge after moving “in lockstep” from 1971 to 2002, he said.

http://www.bloomberg.com/apps/news?p...K74&refer=home

[Scot]

Re: Greenspan: I didn't do it!

I was beginning to think those 1% interest rates helped inflate the housing bubble, but now that I know it was a billion Chinese with an annual per capita income of about $4,000 saving all that money, I feel a lot better now.

You dismiss the possibility that the Chinese could really save all that much money, yet in the last 5 years or so the Chinese have increased their treasury holdings from $100 billion to over $600 billion.

And honestly I think Greenspan gets too much of the blame for this mess.

[we_are_toast]

Re: Greenspan: I didn't do it!

You dismiss the possibility that the Chinese could really save all that much money, yet in the last 5 years or so the Chinese have increased their treasury holdings from $100 billion to over $600 billion.

And honestly I think Greenspan gets too much of the blame for this mess.

There certainly is enough blame to go around. But do you really think the maestro couldn't have stopped the housing bubble by rapidly raising interest rates or simply by doing his job and regulating the types of crazy loans that were being made?

[FRED]

Re: Greenspan: I didn't do it!

iTulip calls "bullshit" on Greenspan: Fueling the FIRE Economy

[Sapiens]

Re: Greenspan: I didn't do it!

iTulip calls "bullshit" on Greenspan: Fueling the FIRE Economy

Like I have said before, there will come a day when the most astute will clearly see that Greenspan did in fact intentionally set out to destroy the system.

[drumminj]

Re: Greenspan: I didn't do it!

Like I have said before, there will come a day when the most astute will clearly see that Greenspan did in fact intentionally set out to destroy the system.

Sapiens, you think Greenspan pulled a Francisco D' Anaconia?

[Sapiens]

Re: Greenspan: I didn't do it!

Sapiens, you think Greenspan pulled a Francisco D' Anaconia?

Perhaps, as it is said, a leopard does not change his spots. Greenspan is a hard money man, and his actions speak louder than words... In in context, his actions only make sense if he was hell bent into creating a system implossion.

[Truefire]

Re: Greenspan: I didn't do it!

I was beginning to think those 1% interest rates helped inflate the housing bubble, but now that I know it was a billion Chinese with an annual per capita income of about $4,000 saving all that money, I feel a lot better now.

http://www.bloomberg.com/apps/news?p...K74&refer=home

Greenspan didn't do it huh? Read his own words, probably written prior to him selling his soul to the Illuminati.
http://www.europac.net/greenspan.asp

No, I dont think history will be kind to this creature. May God have mercy on his soul.

[pescamaaan]

Re: Greenspan: I didn't do it!

Greenspan didn't do it huh? Read his own words, probably written prior to him selling his soul to the Illuminati.
http://www.europac.net/greenspan.asp

No, I dont think history will be kind to this creature. May God have mercy on his soul.

i'm confused....based on this paper, are you saying Greenspan blew the system up from within to kill the welfare state and thus return us to the gold standard?

[Truefire]

Re: Greenspan: I didn't do it!

i'm confused....based on this paper, are you saying Greenspan blew the system up from within to kill the welfare state and thus return us to the gold standard?

What I am saying is that Greenspan understood what the federal reserve system was all about. He understood money & its ties to gold.

This paper he wrote was defending the Gold Standard (his former view). The federal reserve system, unshackled from the gold standard, was left unchecked with respect to money supply because the money was not redeemable in gold thereby birthing the opportunity to expand, creating the asset bubbles that we have seen in the past decades.

[Starving Steve]

Re: Greenspan: I didn't do it!

In a nation like the U.S. where savings was almost non-existent, Greenspan said that there was too much savings in the world. And where did he get that thinking? Answer: Arthur Laffer ( the other economic genius and former advisor to Ronald Reagan )

In Yiddish, the word for dangerous idiots like these is "shlamiels".:rolleyes:

But what really bothers me now is that our universities continue to teach this economic nonsense to students.... Imagine the damage another generation of so-called educated economists could do to the world!

[c1ue]

Re: Greenspan: I didn't do it!

Like I have said before, there will come a day when the most astute will clearly see that Greenspan did in fact intentionally set out to destroy the system.

I'd believe this more if:

1) Greenspan didn't have a reputation dating back 30 years as an economic bobblehead

2) Greenspan wasn't today cashing in on his ex-Fed tenure. The latest example being his employment as a consultant for John Paulson - a hedge fund dude renowned for making $3B in one year, and also presently short the market. Unsurprisingly Greenspan then talked about nationalization - thus reinforcing a negative market trend which (it appears) Paulson cleaned up his positions with.

Just because he understands what he was doing, doesn't mean necessarily it was an altruistic decision.

But time will tell.

[Scot]

Re: Greenspan: I didn't do it!

There certainly is enough blame to go around. But do you really think the maestro couldn't have stopped the housing bubble by rapidly raising interest rates or simply by doing his job and regulating the types of crazy loans that were being made?

The problem is that Chairman of the Fed is a political position. If he had popped the bubble earlier by raising rates (as if he is the only one that sets them), he would have been bashed for denying homes to those that need them and would have appeared before the senate explaining why it is he crashed the housing market.

And as to his regulatory responsibility, I'd say those responsible for protecting against mortgage fraud certainly share in at least as much of the guilt as Greenspan. I'd also place a fair share of the blame on credit rating agencies. Wasn't it Moody's that was accused of shaking down companies in exchange for good ratings?

[bobola]

Re: Greenspan: I didn't do it!

Greenspan quotes;

"Even though some down payments are borrowed, it would take a large, and historically most unusual, fall in home prices to wipe out a significant part of home equity. Many of those who purchased their residence more than a year ago have equity buffers in their homes adequate to withstand any price decline other than a very deep one." -- October 2004

"The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions .... Derivatives have permitted the unbundling of financial risks." -- May 2005

"Improvements in lending practices driven by information technology have enabled lenders to reach out to households with previously unrecognized borrowing capacities." -- October 2004

"Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward." -- February 2004

“Thus, this vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent. To some extent, those higher values may be reflecting the increased flexibility and resilience of our economy. But what they perceive as newly abundant liquidity can readily disappear.” -- August 2005

“Why didn’t you stop the illegal or shady practices you knew were taking place in subprime lending?” -- Leslie Stahl, September 2007, 60 minutes interview.
“Err, I had no notion of how significant these practices had become until very late. I didn’t really get it until late 2005 and 2006”, -- Greenspan’s reply.

[Finster]

Re: Greenspan: I didn't do it!

I was beginning to think those 1% interest rates helped inflate the housing bubble, but now that I know it was a billion Chinese with an annual per capita income of about $4,000 saving all that money, I feel a lot better now.

http://www.bloomberg.com/apps/news?p...K74&refer=home

I've written on this topic before. (Greenspin) Ben Bernanke has also tried to blame China for our problems (McDonald’s Made Me Fat).

In a nutshell, their argument is that China inflated our credit markets with its excess savings. But it is transparently invalid, because it sidesteps the question of where all those dollars that China "saved" came from in the first place. China doesn't buy US securities with renminbi, it buys them with US dollars. And every one of those dollars bears an inscription that reveals where it came from: Federal Reserve Note.