Touchy, touchy. It must really suck when everyone else already sees the truth.
"What is fairly clearly the case from the data, is that if adjustable rate mortgages weren't available, the purchases (of homes) still would've occurred," he said.
Um, OK, but what about the rate cuts? And to say that the Fed was a helpless little lamb is absurd. If Greenspan spoke up, people who have at least listened but no, he chose to go along with whatever Wall Street wanted just as Bernanke is doing today.
Chris wrote yesterday about Mr Bubble's endorsement of John McCain. I couldn't let this moment pass without noting that Greenspan and McCain's paths have crossed before:
In 1985, Keating hired Alan Greenspan as an economic consultant, in an effort to convince an oversight agency to exempt Lincoln Savings from certain regulations. Greenspan delivered a favorable report, writing that Lincoln Savings was "a financially strong institution that presents no foreseeable risk to depositors or the government." (Greenspan produced similar favorable reports on numerous other banks that also failed soon after.) The agency ultimately declined the request.
The poor little lamb sounds like he's getting a bit testy. To hear him tell his side of the story, it's as if he was a casual observer during his terms as Chairman of the Federal Reserve. He endorsed tax cuts yet could not manage to have his concerns on poor regulation heard. And his policy of low lending rates? Nope, had nothing to do whatsoever with the latest bubble. How convenient.
Remember, this is the guy that McCain thinks is a great economic leader.
The man who owns three bubbles including the current financial mess has come out in support of McCain. Last year it was McCain who admitted he knew nothing about economics (except perhaps his Keating-5 experience) but he "was going to read Greenspan's book" and now it's Mr Bubble himself giving back the love. Birds of a feather...
Greenspan, the U.S. Fed chairman from 1987 to 2006, endorsed the Republican presidential candidate John McCain in the interview.
"I'm Republican and I support John McCain, who I know very well and who I respect a lot,'' he said.
Is this guy for real? He played a critical role in building this financial mess along with the Republicans. He never spoke out against this growing problem and only helped feed it. Why anyone gives him an ounce of respect is beyond me but he ought to be publicly shamed for his actions and inactions.
Writing in the Financial Times, the former Fed chief said much of the financial system's risk-valuation models failed, not because they were too complex but because they were "too simple to capture the full array of variables governing that drive global economic reality."
"The crisis will leave many casualties. Particularly hard hit will be much of today's financial risk-valuation system," he wrote.
While insisting that current risk management models and econometric forecasting methods remain "soundly rooted in the real world," he said risk management can never be perfect.
Proving again that's he's a complete ass as well as first class idiot.
When will it ever end? Much like the previous attempts by the banks to bail themselves out or have tax payers bail them out for their own stupidity, now the bond insurers who helped prop up the subprime bubble are in talks with the banks (yes, many of the same who bought and sold the junk) to prop up the bond insurers. Sounds easy and straightforward, doesn't it?
When common sense and facts disappear from the business model, there is a problem. This market stopped making sense a few years ago but was clouded by the billions in profits that were being dragged in by everyone. It really would have helped back then to have an SEC who cared or a Fed chief who knew how to speak out. To think McCain actually thinks Greenspan is a genius. Heaven forbid...
I'm sure that Mr Bubble and the SEC were on top of any potential problems in this sector as well. So much so that Greenspan has even gone to work at a hedge fund.
Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.
A London prime broker told The Sunday Times that even before last week’s extreme gyrations, nearly two-thirds of London-based hedge funds had lost between 4% and 10% of their value. A “significant number” had lost much more, he said.
The manager of one of Britain’s biggest hedge funds said: “It’s been an extraordinary week. Even in the crash of 1987 I don’t remember so much carnage.”
Billions are wiped off the books and all we get is Greenspan giving excuses, Bush talking about the fundamentally strong economy and Wall Street executives leaving with millions. It's true that profits never should have been so high before because they were all based on garbage, though everyone profited handsomely from those numbers. Now, nobody takes any blame unless you want to call the platinum parachutes blame. Accountability has never been so far away.
Wouldn't it have been easier if "leaders" bothered to provide some reasonable ground rules? Obviously when people want to push the limits, they're going to find a way to do what they want to do. However, I reject the arguments that claim we could not have done anything and that "the market" will ultimately solve such excesses. Perhaps, but at what cost?
Our leaders both at the Fed and in Congress could have minimized the fallout but they all were too busy playing Republican financial experiments with our financial system. Just like the Republican societal experiments with supposed safe sex (abstinence programs), I wish they would just experiment amongst themselves and leave everyone else out of their little games.
A few examples of the lawsuits, after the jump.
This time, investors are aiming not only at mortgage lenders, brokers and investment banks but also insurers (American International Group), bond funds (State Street, Morgan Keegan), rating agencies (Moody's and Standard & Poor's) and homebuilders (Beazer Homes, Toll Brothers et al).
Borrowers, too, are suing both their lenders and the Wall Street firms that wrapped up their loans. Several groups of employees and pension-fund participants have filed so-called ERISA/401(k) suits against their own firms. Local councils in Australia are threatening to sue a subsidiary of Lehman Brothers over the sale of collateralised-debt obligations (CDOs), the Financial Times has reported. Lenders are even turning on each other; Deutsche Bank has filed large numbers of lawsuits against mortgage firms, claiming they owe money for failing to buy back loans that soured within months of being made.
“It seems that everyone is suing everyone,” says Adam Savett of RiskMetrics' securities-litigation group. “It surely can't be long before we get the legal equivalent of man bites dog, where a lender sues its borrowers for some breach of contract.”
The authorities, too, are baring their teeth. Several Wall Street banks have received subpoenas from New York's attorney-general, Andrew Cuomo, requesting information on their packaging of now-stricken securities. This comes on top of a deepening probe into possibly inflated home-price appraisals by brokers and lenders, including Washington Mutual and First American Corporation. Ohio's attorney-general, Marc Dann, has been just as hyperactive, suing over a dozen lenders and brokers.
No less important is the spadework being done by the Securities and Exchange Commission, America's main markets watchdog. It is conducting more than 20 investigations, including one into the arrangements banks entered into with hedge funds that may have been designed to hide or delay mark-to-market losses.
So instead of proper guidance and regulation, we are stuck in this cycle of lawsuits, counter lawsuits and probably counter-counter lawsuits. How is this any easier or less painful than regulation? I'd like to hear how this model is superior because it just looks nuts to me.
The other point that jumps out is the issue of lawsuits. Republicans always want to limit the right to sue though if we're not providing any oversight or regulations to protect people, what other options are there? Funny too that there are plenty of businesses suing, showing that they are just as open to lawsuits as regular people, despite their complaints about lawsuits. The old do as I say, not as I do from big business.
With Morgan Stanley announcing another $9.4 billion write-down, due to the subprime lending crash, the US Federal Reserve is extending $20 billion in loans to the banks. Europe is even worse, with $500 billion thrown in, though the US may be adding more as more losses hit the street.
As you can see, between the lives ruined when houses were lost, the healthy bonuses and exit packages based on voodoo economics, creating a real estate bubble and inflating prices, job losses in the tens of thousands and now more government intervention, this hands off policy is a real winner. Boy did we save money or what? The Republicans wanted laissez faire economics for decades and this is a direct result of those policies. Don't forget to thank Greenspan and the GOP for making this all possible.
Remember, industry can self-regulate and nothing at all could have been done to prevent this. At least, that's what the Republicans and Greenspan keep telling everyone.
Not only from outside consumer groups, but also from another member of the Fed. Mr Bubble can spin it anyway he likes, but this problem is jointly owned by Greenspan and Bush. Neither had any interest in stopping the good times and blindly ignored all of the warnings for the bad times ahead.
Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.
But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.
(More warnings that were ignored, after the jump.)
In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of “best practices” and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.
And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.
John C. Gamboa and Robert L. Gnaizda of the Greenlining Institute implored Mr. Greenspan to use his bully pulpit and press for a voluntary code of conduct.
“He never gave us a good reason, but he didn’t want to do it,” Mr. Gnaizda said last week. “He just wasn’t interested.”
Today, as the mortgage crisis of 2007 worsens and threatens to tip the economy into a recession, many are asking: where was Washington?
Indeed. Where was Washington and why are they asking everyone else to pay for problems that the allowed?
Um, if you pump more money into the subprime crisis, you are artificially inflating prices for everyone else. That would be meddling. That is part of the current problem, so why drag out the misery any longer? It's no wonder this guy became the all time bubble king.
Alan Greenspan, former chairman of the Federal Reserve, suggested Sunday that a tax break or other government financial help for homeowners facing the mortgage crunch would be the best political fix for the economy.
He cautioned against meddling with home prices or interest rates to address the housing problem.
Greenspan did not specifically call for a tax cut. Instead, he called for the government to apply money to the severe housing market slump. Such a cash infusion would typically come through a tax break or a new government spending program.
What a piece of work this guy is. Fortunately there are always plenty of media lapdogs who are only too happy to go along with his nonsense instead of calling him a liar or incompetent idiot to his face. He's an embarrassment and a disgrace to the country.
"The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when...market capitalism quietly, but rapidly, displaced much of the discredited central planning that was so prevalent in the Third World," Greenspan wrote.
Yes, it's all the fault of that damned Cold War. Damned Cold War! It's impressive to see such an acceptance of responsibility from Greenspan. Then again, considering that nobody in the Bush administration ever was held accountable after 9/11 why should Greenspan be any different?
Absolutely spot on. Here are a few highlights from an interview with Patrick Artus, chief economist of Natixis in France. Maybe people in the US are too close to the situation or don't want to admit that we allowed such a bad choice to stay in power for so long. Either way, the Greenspan-love defies all logic and few people except perhaps Hillary, ever bothered to call him out.
Artus: Greenspan was an arsonist and a fireman combined. He derived all his glory from his reaction to the savings-and- loans crisis, to the collapse of Long-Term Capital Management LP, and to Sept. 11, 2001. But LTCM and the savings-and-loans crisis were his doing. He absolutely failed to see where the malfunctions in the U.S. economy were.
Greenspan came up with a phrase, ``irrational exuberance,'' in 1997, but he didn't do anything about it.
Nayeri: How would you sum up his track record, then?
Artus: He was a very bad Federal Reserve chairman. He created four major crises: savings and loans, LTCM, new-technology shares, and subprime mortgages.
Nayeri: But surely you will acknowledge that Greenspan saved the planet at crucial turning points?
Artus: Yes, but after the fact. He's congratulated for his role as fireman, but he's the one who started the fire.
He had no vision of what was dangerous. Today, we're destroying the world banking system with this subprime crisis. Outstanding subprime loans add up to $1.2 trillion. That's the equivalent of Italy's gross domestic product.
Nayeri: But the world has enjoyed economic prosperity in the meantime.
Artus: The problem is that you pay for it later.
You can always manufacture growth by having extremely low rates and producing asset-price bubbles. But that's not a way to generate growth. You can't do that in the long run.
It did not have to be this ugly, but because Bush, Greenspan and the GOP thought that industry could regulate itself we're now looking at some horrendous job termination numbers. How many of these people will enjoy a cool $50 million payout?
Citigroup, Wall Street’s largest financial services firms, is planning its second round of large-scale layoffs in less than a year, CNBC has learned.
People inside Citigroup say the firm hasn’t set a target number of cuts from its roughly 320,000 employees. But people with knowledge of the matter have described the pending job reductions as "massive" and "large." The total number could reach as high as 45,000, these people estimate.
This comes on the heels of 17,000 people fired earlier this year. Merry Christmas from the GOP and Greenspan.
Doesn't he know you're not allowed to criticize the failed policies of the Bush/Greenspan years or else it will be considered "gloating?" Shouldn't we all rally round the wonderful effort that Team Bush gave us? It helped us with the war, so why not with the economy?
How did things go so wrong?
Part of the answer is that people who should have been alert to the dangers, and taken precautionary measures, instead blithely assured Americans that everything was fine, and even encouraged them to take out risky mortgages. Yes, Alan Greenspan, that means you.
But another part of the answer lies in what hasn’t happened to the men on that Fortune cover — namely, they haven’t been forced to give back any of the huge paychecks they received before the folly of their decisions became apparent.
Around 25 years ago, American business — and the American political system — bought into the idea that greed is good. Executives are lavishly rewarded if the companies they run seem successful: last year the chief executives of Merrill and Citigroup were paid $48 million and $25.6 million, respectively.
But if the success turns out to have been an illusion — well, they still get to keep the money. Heads they win, tails we lose.
When Wall Street CEOs can't give a straight answer about the extent of credit losses, why should anyone be surprised when the dollar free falls? Who can honestly have any near term faith in this mess that Bush, Greenspan and the GOP created? The bill for America's easy credit years has arrived and it's not pretty.
Despite all of the brainpower, experts and money, Citigroup has no clue what they have on their books. Citigroup smells like a company soon to be up for sale with this amount of disorganization.
Goldman Sachs downgraded Citigroup, a Dow component, to "sell" and said the No. 1 U.S. bank may have to write off $15 billion for debt losses over the next two quarters.
Yes, even more losses for the company that just shoveled over a healthy retirement plan to the sacked CEO despite his incompetent management of the company. It just gets better.
Goldman also cut its profit estimates for Citigroup through 2009, saying the bank would likely take additional hits from securities linked to subprime mortgages and other investments.
"It's been guess work as to how big a writedown Citigroup's going to take," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.
Freddie Mac is also joining the fun to the tune of $5 billion of write-downs. Rumors are floating around that UBS has another $9 billion in bad debt related to the subprime market as well. Brilliant oversight of the financial markets by Greenspan and the Republicans. Decades of crying by the GOP about how clever they are with financial matters and the only expertise they offer is financial collapse.
