Greenspan: Don't blame me for this mess

Well, you're blamed !! You and Friedman, Stockton, Bush, Reagan, Rubin are all at fault, for this economic disaster. Your greed, hubris and, at times your lack of common sense, not to mention compassion, were in full swing, during your reigns !! Your supply-side economics have the whole American economy sliding downwards, in free-fall, but you got yours !!
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE AND WHOLE. NOW.

Unbelievable.
Al,
It's given economic policy to raise interest rates to damp down a inflationary, overheated housing market, and general debt/money party frenzy.
You are probably the one American that bears the largest share of individual blame.
Of course there's plenty of blame for everyone else.
And to blame China for the whole mess is to admit the US has no control or influence over it's own destiny.
Maybe you could blame Reaganomics too?

Why Economies Fail
William Mostovoy

Fifty days into the Obama administration the nation shakily attacks the business and military decisions that will shape how important the United States may be in the future. The bankers bonuses bad as they were pay for those cool Harvard guys Porshes and Mercedes. The government will bail out banks. Banks house the idlle wealthy intellect this country lives for. Wealth costs something in dilligence. If a bank know's it can always get gpvernment bailouts it risks things and pays outrageour bonuses. The country can't afford the banks behavior, the people can not afford the housing the developers chose to builld and the elite racism creates a street battle every day in America.

If a suburban home coss $1,000,000 with 20% down the couple would need a combined income of $240,000. With say 10% family wealthy paid for the only people making suburban home wealth are the thieving bonus ridden bankers, and their are precioius few of those. Moiney costs something. Dilligence costs something. Japan and Germany make great Engineers. Maybe we could get some accountants from Israel again?

To continue, the foreclosure rate grew far to high in the previous year tempting illegal activities to pay for extended individuals. People grew inward and suspicious due to the carrying of personal debt and a house in arears. The dow hovers now at around 7000 with GE trading at $1.30/share down from over 80. GM trades below $1.70/Share, and Ford trades below $1.00/share. Suburbs relied on not only bankers but doctors, professionals and manufacturing executives. The deficit in manufacturing abetted the collapse in the credit markets, the home markets and bank solvency. The stimulus does not address manufacturing jobs in the U.S.

The mood of the people supports President Obamas quiet wait and see peace. Americans love to look upon the nation as the wealthiest nation on earth. Change has come. It's like the 46 year old engineer who now writes on the internet and lives with himself knowing that without that disposable income purchases remain ideas for the future and the pressing nature of surviving looks to be what the country is about.

ARMs became pretty common in the 1990s, so I don't know how he could say that in 2004; by then the consumers wanted fixed rate mortgages so they could be locked in. Those innovative 'teaser rates' certainly did get people in trouble. I think Greenspan was out of touch. What a surprise.

It's pretty clear that having the financial sector police itself is as effective as doing so in a Georgia peanut processing plant. Sure, the SEC and the Fed get some of the blame, but the real culprit is the previous administration's currying favor from corporate interests. That Halliburton no-bid mentality has come home to roost.

And how did these developing nations get so much money? From America companies off-shoring production and American banks allowing low interest rates on credit so American consumers could buy more stuff than they could afford! Come on already. Greenspan is a pip!

For Greenspan not to be able to admit at this point that, when it comes to market regulation we must err on the side of caution, shows just how irresponsible he and that stupid trickle-down Reaganomics of his was in the first place.

Yes, he would tacitly have to admit some misjudgment on his own part in making such a statement now, but I think it is imperative that that is one of the takeaway lessons from the bubble and current resulting crisis.

You need two hands to really control "irrational exuberance" -- one can be invisible and from the market, but it had better be backed by a very real regulatory hand wearing brass knuckles for when things start to get really off track!

read

iamthewitness.com

What's the matter Mr Greenspan, are you worried about your legacy?

Be honest, is there anyone who could sit and listen to Greenspan and not fall into a deep sleep. What do you want to bet every time he testified before congress in any fashion there was a run on No-Doze!

Hey, it looks like more and more Americans are getting the opportunity to live the 'Slumdog Millionaire!' dream.
Should it be called Bushville or Alanville?

Hey, it looks like more and more Americans are getting the opportunity to live the 'Slumdog Millionaire!' dream.
Should it be called Bushville or Alanville?

here's the link;

http://thelede.blogs.nytimes.com/2009/03/11/tent-city-report/?hp

He looks like the forensic artist's age progression of Alfred E. Newman.

Anyway, don't let the Maestro con you into thinking he had no idea all that fraud was being woven into all those esoteric unregulated securities.

He knew perfectly well what was happening.

Greenspan: "The buck stops anywhere but here". He did not know what he was doing then when he agreed to tax cuts in 2003 and to make sure his folly was complete he lowered interest rates.

Clinton could not wait until Greenspans term was up to reappoint him. I remember thinking "what's the rush? The man never increased the margin requirements for the stock market."

The person who is responsible is David X Li, and his "Manchurian Formula"
=========================
David X. Li
From Wikipedia, the free encyclopedia
David X. Li is a quantitative analyst and a qualified actuary who pioneered the use of Gaussian copula models for the pricing of collateralized debt obligations (CDOs).[1][2]
Li was born and raised in a rural part of China during the 1960's.[1] He received a master's degree in economics from Nankai University. After leaving China he earned an MBA from Laval University in Quebec.[1] His financial career began in 1997 at Canadian Imperial Bank of Commerce.[1] In 2004 he moved to Barclays Capital and headed up the quantitative analytics team.[1]
Li's paper "On Default Correlation: A Copula Function Approach"[2] was the first appearance of the Gaussian copula applied to CDO's, which quickly became a tool for financial institutions to correlate associations between multiple securities.[1] This allowed for CDOs to be accurately priced for a wide range of investments that were previously too complex to price, such as mortgages. However in the aftermath of the Global financial crisis of 2008–2009 the model has been seen as fundamentally flawed and a "recipe for disaster".[1] According to Nassim Nicholas Taleb, "People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked. Co-association between securities is not measurable using correlation," in other words because past history is not predictive of the future. "Anything that relies on correlation is charlatanism."[1] Li himself always understood the limitation of his model, in 2005 saying "Very few people understand the essence of the model."[3] Kai Gilkes of CreditSights says "Li can't be blamed", although he invented the model, it was the bankers who misinterpreted it.[1]
In 2008 Li moved to Bejing where he works for China International Capital Corporation as head of the risk-management department.[1]
[edit]

VJ Machiavelli
NO MORE SCHUMER
NO MORE PELOSI

Morts right on this one,

ARMs were nothing unusual and my wife and I purchased our current house using one. We refinanced into a fixed-term mortgage before the ARM expired when interest rates became favorable.
.
During the early 80's when mortgages were double-digits, a big mortgage package was negative amortization. This we saw as a losers bet and turned down.
.
These mortgage debt instruments are nothing new.

I'll mark my calendar, Terry; we don't seem to agree very often. Plus, we're both correct.

There are five phases to any good project. This one is apparently in Phase 3 where you search for a suitable scapegoat. In general, that role goes to the guy that had to make the most technical decisions, since the outcome of a technical decision will be a complete mystery to most folk at least until it is time to assign a suitable scapegoat.

Phase 5 is Praise and Reward for the non-participants. It will be interesting to see who that will include. What more would Barney Frank have to do to have a klieg light placed on his shakedown schemes.

Vijay makes a good point about the infamous "formula" that was supposed to quantify risk and make those synthetic instruments "safe" (like Michael Corleone was going to be "safe" at the meeting that was being arranged at the end of GFI).

For an excellent expose of this formula and its deficiencies, see the cover story on the recent WIRED magazine.

From a criminal defense point of view, the formula was a master stroke: It gives the putative defendants "cover". They can and will claim that they relied on this wondrous "black box" which was supposed to boil down risk down to a simple number.

How could they possibly know there were some loose wires inside the box???

Not proof beyond a reasonable doubt of their criminal intent.

It might work.

However, recall the building of the Brooklyn Bridge. Robling found out some of the wire stock that had been woven into the suspension cables was metallurgically challenged. In other words, a cheatin' sub contractor trying to skim. What to do?

Couldn't unweave them because of the ingenious little spinning gizmos he's invented to weave them in situ.

So: a calculation satisfied him that the margin of safety engineered into the project should accommodate the weakness imparted to the cables, offset it.

So far, 110 years later, he calculated right.

The shysters who were peddling the synthetic derivatives knew the individual mortgages were just as cheesy as the ones in the S & L debacle.

Unlike Robling, they didn't give a s---.

They had their black box, risk formula, as cover. They felt they could obfuscate their way out of a conviction if indicted.

I'd dearly like to see that hypothesis tested.