If any single person is most responsible for the financial crisis, it’s Alan Greenspan. He presided over a Fed that lowered interest rates to zero (adjusted for inflation) but failed to prevent banks from using essentially free money to speculate wildly. You do not have to be a brain surgeon to understand that if money is free, banks will take it and lend it out. And if oversight is inadequate, the banks will lend the money to anyone who can stand up straight and to many who cannot. The result will be a giant subprime lending bubble that will burst.
If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin. In 1999 they advised Congress to repeal the Glass-Steagall Act, which since 1933 had separated commercial from investment banking. By 1999, Wall Street was salivating over such a repeal because it wanted to create financial supermarkets that could use commercial deposits to place bets in the financial casino. That would yield the Street trillions.
4.04.2010
Once in a while you get shown the light
Just days after making sense for the first time in his life while talking about the Dirty Fed, angry drunken dwarf Robert Reich is on a roll, correctly blaming Greenspan, Summers, and Rubin for the financial crisis and economic collapse.
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3 comments:
A-freaken-men! I will never ever forget wanting to throw a brick at my TV when Greenspan proclaimed that real estate could never lose value. He believed himself the God others held him up to be. Bastard.
oh, how the mighty have fallen be sure to note the date. Hindsight is always 20/20.
Observing these trends in April 2005, Mr. Greenspan trumpeted the expansion of the subprime mortgage market. “Where once more-marginal applicants would simply have been denied credit,” he said, “lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately.”
Aug 26, 2005 ... This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums. ...
Whooops - my bad dewds! hahaha
Jeff
The guy is as good for me as Clinton/Lewinski was for David Letterman.
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