The Greenspan Legacy
This graph comes courtesy of T-Dub, who shows us that Alan Greenspan took the reins of an economy of productive savers and investors, and turned us into spendthrift home-ATM junkies.
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Putting this into a personal perspective (like I've never done)... during the Greenspan days, I was in my VERY early 20s with HORRIBLE credit that I trashed just after I turned 18 and ran off to Nevada (I was legal by late 1998).
Captial One approved me for a credit card and my (then) illegal Nicaraguan boyfriend (he came here in the late 80s during the Nicaraguan civil war - the US promised Nicaraguans amnesty and for good reason but didn't actually give it to them, meanwhile illegal Mexicans were pouring in by the thousands) went from 19% financing on his Nissan truck to 4% on the over-priced brand-new Sentra that we bought in 2002 since I was about to have a baby and we needed a "family" car. The car dealership tried to get us into a $700 a month Montero even though we were single income and living in San Francisco.
It was all made up. The Nissan got destroyed in a flood (no shit) and was never worth $23,000. I cleaned up my credit and have maintained a 0% debt load for years. His credit is still trashed but eventually the US kept its promise and gave him amnesty. Meanwhile the Mexicans are leaving and the made-up money is gone but still burns through credit reports.
That was my experience with the Greenspan bubble. I enjoyed a lot of those credit cards but very little of what I bought in those days remains with me now. Kind of everyone's story, no?
It kept my kid in cute shit on Target's credit line and got me a nice car for a few years; I can admit it was mesmerizing and I couldn't believe they were giving me a piece at the time. The laptop cheap Greenspan money got me died last year, leaving the last of my dirty AG money crap vaporized or otherwise depreciated to the point of salvage.
Kind of like that ZB house you live in now, WCV? Transfixing, isn't it?
It has always been easy to get ourselves into trouble with borrowed money. To my mind, that statement went into over drive during the Greenspan era for two reasons. The first one is obvious – rates. The other is less so – standards. Standards went out the window with the advent of securitization. (Think about your cat getting a pre-approved offer for a Visa in the mail) The dangerous part is that it has changed (possibly for a generation or more to come) the attitude people have towards money (both credit and cash).
Cats with Visa cards would be a lot safer than many humans with credit cards, if only because a cat would have no idea how to conduct transactions with a Visa card.
it's a funny exaggeration but it does make a point
I'm blowing mine on catnip, that really nice litter I've been wanting and a new squeaky mouse to replace this old lame ass mouse that doesn't even squeak anymore
If I were a bank I'd totally give Jeff's cat a credit card. I've heard some great things about that cat...
No, he should not get a Visa. No one knows the heart of The Inglorious Bastard like I do and I tell you, he is not to be trusted any further than he can be thrown. To put a point on it, he's a Bastard but he's my Bastard if that makes any sense. He tells me that he wants to meet Smokey - good for the Bastard, not so good for Smokey - ain't gonna happen.
there's no such thing as a free lunch
I think everyone following this drama has some sort of personal motive for doing so. Mine started with housing. Mostly because of my job (lending money out and collecting payments and before anyone gets started, I make loans that I’m reasonably certain people can repay without resorting to donating blood for cash – I spend a fair amount of time playing “Daddy” to grown people asking to borrow amounts of money that is sure to bury them). Equal to that motive, I follow this over having been publicly humiliated by former family over the size of the house I lived in and the salary I earned relative to mortgage brokers during the go-go days. Even someone as dull as me could tell that something wasn’t right. People who had previously worked for me doing filing and completing DMV forms to register liens on cars were going out into the wild, wild, west of mortgage brokering and in some cases making upward of $200,000 per year in doing so. Sometimes, I wish I had done that myself. I may be dull but I am disciplined enough to realize that it wasn’t going to last and that the earnings would have to be saved. Then again, at the time I was married to a woman who was “a glass perpetually half-full” and deep down I know she would have blown it as quickly as I could have made it so in the long run, things worked out. As an example, one man wasn’t enough for her so I don’t think doubling or tripling my salary was going to be enough for her either :>). All’s well that ends well though and I’m glad things worked out the way that they did. As far as I know, the ones who went off to sell Jacques Cousteau Snorkel Mortgages to unsuspecting rubes chasing housing fortunes all became like coke dealers who got hooked on their own junk. They blew through earnings like an 18 year old sailor making port in Bangkok after six months of using his left hand while out to sea. None of them retired. My hope is to have saved enough while all of this unwinds and then call it quits and move to rural North or South Dakota to go hunt pheasants, fish and boat, ride motorcycles and basically tell the world that it can kiss my Smug Bastard ass. 40 below zero in the winter time keeps all the riff-raff out - :>)
From the no free lunches file (especially in California)
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