Greenspan Seemingly Suffers From Acute Amnesia

Alan Greenspan takes another step down. After his transformation from "Maestro" to "Easy Al" he now fights for the nickname "Greenshill", at least when one follows his comments from Friday. Alan Greenspan, the man solehandedly responsible for the mortgage mess concluded in a speech to economists that today's turmoil resembles the sentiment before the crises of '87 and '98. According to him the mortgage malaise has infected the rest of the economy. This assessment comes from the man who preferred to douse every monetary inflationary excess with more of the poison that caused all exaggerations in the first place.

Greenspan must suffer from acute total amnesia. It was him who once praised the doubtful fact that all Americans could buy a house because there were such financial innovations like zero down ARMs.

Greenspan did not turn a nation into homeowners. Greenspan pushed a whole nation into the highest debt ever, be it on the private, communal or federal level.

To say now that bubbles cannot be defused until the fever breaks is an outright lie. It was in his hands to pinch the bubbles and he never did. Instead of taking the punch bowl away Greenspan laced it with evermore liquidity and now we look at a toxic cocktail and he starts trying to shift the blame.

This crisis will play out as all crises. Denial > anxiety > fear > depression > panic.

Comments

[Bruce Merri...:]

I'm afraid that history may not be too kind to Alan...two recessions and multiple "down turns" on his watch. Monetary intervention (raising interest rates and shutting down the money supply) is a crude weapon which always overshoots both ways and is plagued by the fact that there is a one year lag going and coming.

Bruce

2007 Sep 09 10:58 AM

[censeo:]

I saw the dangers of trickster greenie in 2002. What the heck was everyone else thinking? That the tooth fairy would make it alright?Never never trust an adherent of Ayn Rand. Maybe Allie can go around blowing up Fountainhead and reduce inventory.

2007 Sep 09 06:20 PM

[MikeH:]

Greenspan is the banker's lackey. The Fed is the banker protection society. Will someone please explain to me what is wrong with a 1% prime and universal home ownership? Only one thing: ARM rates and banker profits are tied to the dependent indeces. The Fed is keeping ARMs artifically high for the benefit of their cocktail and golfing buddies. How many first-time homeowners realized the American dream as a result of cheap credit? Yes, a few in California, Arizona, Nevada and Florida will not have their bets pay off -- mostly because of speculators overheating those markets. Take away defaults in those states and defaults are actually down nationwide. Alan Greenspan drove the economy like it was a speedboat -- 12 up and 17 down. Good riddance. Now he can make a handy living giving speeches and writing books for the effete. Protecting people from themselves is the socialists' first last and always excuse for taking away freedom and interferring with the invisible hand of the market.

2007 Sep 09 06:57 PM

[wixeywaxy:]

You are correct in your assesment of A. Greenspan, but were you saying these things when Alan was receiving all the praise typically acredited to him? I have constantly tried to make the case that interest rates have to be fair, fair to the lender as well as the borrower. Interest rates at their lowest were less than the honest inflation rate and certainly unfair to the savers who depend on them as a source of essential income. Needless to say I was never a Greenspan rooter.
I have forgotten the english rhetoric I learned in school 60 years ago and make many grammar mistakes and my spelling has flow away also. Therefore with a measure of humility I will remark that it should be, it was he, not it was him. I think it's called the predicate nomitative. WW

2007 Sep 09 07:19 PM

[Carl leason:]

I pretty much agree with everything that has been said above, but
in the late 80's and early 90's we had "negative amortization" Not good ! But now we have the same result but with different names.
Zero down,..adjustable rates, ...No documentation, etc,...
Lets all get honest and lay the blame where it belongs, and that's with the lenders,.. mortgage applications that were full of lies,.. underwriters who didn't care,...Appraisers who jacked up the property values to keep their mortgage writers and lenders happy,...Bankers who wanted to look good in the eyes of their bosses that they are originating so many loans,... and buyers who would willingly lie to get their dream home,..etc,...etc. !!
To be sure, Greenspan wasn't the worlds best, and didn't really care look at the results of his actions, but the politians wanted to keep the economy on a roll,..ever upward,..to make the themselves appear great and unemployment low ! Everyone's making money, right ??
Well, anyone with any brains could see that prices were going way up past reasonable, but that's the next guy's problem !! right.? Just look the other way and everything will turn out OK.
But Bush also needed a LOT OF BUCKS to finance his wars too ! So the Fed....ever obedient, just ran the printing presses , print more greenbacks to fund the war, import everything, ...Not to worry,...
You see,. what really happens is that the dollar has now been made so weak that housing is becoming cheap to the people in Canada, China and Europe and that will start a house buying binge that will save us all from loosing our homes or money,...right ??
Problem solved. !! Unemployment has never been a problem, regardless of who's in office,..that's a non problem. There are plenty of jobs flipping hambergers ! LC

2007 Sep 09 10:23 PM

[omooc:]

On page 2 of the current edition of Barron's (dated 9/10/07) has a quote by AG. Following it, I read that, after AG spoke, the market nosedived. What is he up to? omooc

2007 Sep 09 11:01 PM

[Sol Rosenberg:]

Crazy Al should just go quietly into the night and hope Bernanke gets the blame. Nothing he says now can help him.

2007 Sep 11 02:49 AM

[Dutch:]

Hopefully, many people who have supported Republicans in the past, for religious or other questionable reasons, will now realize that Bush and Greenspan simply worked to create a much larger gap between the haves and have nots and have primarily benefitted people and organizations with advance knowledge and sufficient resources to know when to get in and when to get out. Bush seems rather unintelligent and removed from reality and may not really understand just how much he has harmed the country. He seems to just be a spokesman. Greenspan clearly should have known that he was recreating events of the great depression.

2008 Feb 29 09:14 AM