Greenspan: Throw Cash At Mortgage Crisis

Wow! Talk about moral hazards. Is it possible there could be a bigger moral hazard than Alan Greenspan's proposed solution to the housing crisis?

"Cash from the government", presumably deposited directly into the bank accounts of homeowners who are about to lose their homes, is the former Fed Chairman's solution to the current foreclosure crisis. He added, "Cash is available and we should use that in as large amounts as is necessary to solve the problems".

[You might think I'm starting to just make this stuff up but I'm not.]

The Maestro was on ABC's This Week with George Stephanopolus yesterday and weighed in a variety of subjects, none of which involved any culpability on his part for the mess that is the current U.S. economy and global financial system.

Greenspan ran the central bank for more than 18 years and, in response to the bursting of the stock market bubble, he succeeded in inflating a housing bubble just before he was forced to retire.

The delayed effects of these policies will see the U.S. economy run into the ground sometime next year.

He has been criticized by some for keeping interest rates too low for too long after the 2001 recession and now most analysts agree that leaving an 80-year old to run the largest economy in the world was just a bad idea.

Comments

[Semaj Nottus]

Tim,

Your shock will only increase when I tell you that Robert McHugh, PhD, suggests a specific figure of $300,000 for each household.

He notes that since the Fed has been inflating the money supply at double-digit rates before they hid M-3 from us, and presumably haven't become born-again monetarist conservatives since hiding M-3, the value of the dollar has dropped 38% in the last five years. Funny how its steady decline inversely corresponds to, and slightly precedes, the bull market that began five years ago.

"If the Master Planners are going to trash the dollar anyway, why not hand the bulk of increasing money supply directly to each household? Why not send a check for $300,000 to every household? Now that is a real bailout, it would be effective, and we'd end up at the same place, a dollar valued in the 40s, but with a much stronger economy, and a rejuvenated consumer, able and ready to spend. Wall Street would benefit with a 'trickle up' benefit, rather than this administration's preference, to hand money to Wall Street and hope for a 'trickle down' benefit."

For a more complete treatment, from October before the dollar broke long term support at 77, here's an article on the subject:
www.safehaven.com/arti...

Best regards,
Semaj Nottus

[Semaj Nottus]

Tim,

Your shock will only increase when I tell you that Robert McHugh, PhD, suggests a specific figure of $300,000 for each household.

He notes that since the Fed has been inflating the money supply at double-digit rates before they hid M-3 from us, and presumably haven't become born-again monetarist conservatives since hiding M-3, the value of the dollar has dropped 38% in the last five years. Funny how its steady decline inversely corresponds to, and slightly precedes, the bull market that began five years ago.

"If the Master Planners are going to trash the dollar anyway, why not hand the bulk of increasing money supply directly to each household? Why not send a check for $300,000 to every household? Now that is a real bailout, it would be effective, and we'd end up at the same place, a dollar valued in the 40s, but with a much stronger economy, and a rejuvenated consumer, able and ready to spend. Wall Street would benefit with a 'trickle up' benefit, rather than this administration's preference, to hand money to Wall Street and hope for a 'trickle down' benefit."

For a more complete treatment, from October before the dollar broke long term support at 77, here's an article on the subject:
safehaven.com/article-...

Best regards,
Semaj Nottus

[Hugh]

Think it might be a good time to own gold?