Greenspan & "It Ain't Me, Babe!"

[Johan]

Greenspan is going to go down in history as the genius that never was. He now admits to having "made a mistake." (http://www.ft.com/cms/s/0/aee9e3a2-a11f-11dd-82fd-000077b07658.html) His mistake was pumping far too much easy money (low rates) into the economy, coupled with a lack of will to curb aggressive lending practices. The two (easy money and aggressive lending) combined to cause a gigantic real estate bubble, with millions on the hook for homes at unsustainable values on their mortgages, which subsequently blew up.

I find it distasteful that so many individuals complicit in this whole situation, including Barney Frank, Greenspan, and others, are so full of excuses. The only saving grace in this for me personally is that I bought a moderate home at a fixed rate in a moderate community, and have seen no devaluation of my property's value. Such is not the case across the country.

[KingGorilla]

The idea that he said he seriously rethinks his ideas on unfettered, libertarian business astounds me. And he spelled it out very well to congress:

He thought that the corporations could act in their own best interest. Lamentably, the story was the corporations worked for the CEO's interest, or the owner. And that given how business is done, oversight will be needed.

[Johan]

One reply, 36 views.

Damn...my thread is full of FAIL!

[ShivaX]

One reply, 36 views.

Damn...my thread is full of FAIL!

And it was a decent thread. I just didn't have much to add to it.

Greenspan is a douche. Thats all I got.

[Johan]

And it was a decent thread.

Hey, don't throw me a bone here! I'm licking my wounds, and they taste great!

Okay...that's weird. I like salt? :D

[Goronmon]

In general, I don't feel well-educated enough in the complexities of our economy for me to make meaningful contributions to threads like this.

[fitbabits]

Hey, look. A pity reply for Johan. :)

[BlackPete]

http://www.web-books.com/eLibrary/Medicine/Physiology/Skeletal/long_bone.jpg

EDIT: Wow... 100 posts already?

[Jeffool]

He thought that the corporations could act in their own best interest.I think this is why most people like me (who bitch about corporations' shortsightedness) really don't understand why others (who say corporations' eagerness to make money at any cost is what makes the world go 'round) don't listen. Given an average length of a CEOs term at about six years (heard it somewhere the other day, only link I could find was Michael Eisner saying it years ago (http://www.washingtonpost.com/ac2/wp-dyn/A24411-2004Mar2?language=printer)), why would they attempt to make a company stronger or even stable beyond that point? By then, they'll be working for a competitor and someone else will be left holding the bag.

So to say that the CEOs 'failed' their job is wrong to me, as I think their goal was short-term success, and they achieved it quarter after quarter for almost two decades now. Imagine how many people made shitloads of money and cashed about before the current economic crisis. Not to mention the CEOs that will still get millions a year in bonuses for running the companies into the ground.

These people did exactly what they were paid for, get stock prices higher at any cost, and even when they did a shitty job, the board of directors were too scared to not give a huge parting gift, for fear of not attracting a good CEO (there's bound to be a few out there, right?)
Good topic, Johan. ;)

[J Arcane]

Corporations don't act in their best interests, they only work towards maximizing immediate short term profits and stock prices.

Some of the time, this works out in the end, because the short term profits create more than enough of a pad against future consequences.

And then some times entire markets explode.

[Purple Santa]

Corporations don't act in their best interests, they only work towards maximizing immediate short term profits and stock prices.

Some of the time, this works out in the end, because the short term profits create more than enough of a pad against future consequences.

And then some times entire markets explode.

The joy and benefits of capitalism?:eek:

[jeffbax]

'Alan' Shrugged doesn't help us much...

[Johan]

This article is worth a read. (http://www.bloomberg.com/apps/news?pid=20601109&sid=a9wVqOPk.T_4&refer=home)

The "smartest" executives in business from around the world. Bunch of stupid FUCKERS! :mad:

``It was clear irresponsibility on their part and it's more damning than anyone can imagine,'' says Steinberg, who has been with the WEF for more than a decade. The former McKinsey & Co. management consultant supervises the forum's finance-industry delegates.

``By 2003, the over-leveraging of the system was a serious topic of conversation, but the some 60 of WEF's corporate members from the financial world never had an understanding of how big a problem it was,'' Steinberg adds. ``We had assembled the world's greatest economic experts to confer with them, and the financial community was not aware of that expertise.''

``An exercise in moderation is something the private sector doesn't do very well,'' Browder says.

I'm a conservative, but FUCKING HELL...businesses need oversight. IDIOTS! :(

[BlackPete]

This article is worth a read. (http://www.bloomberg.com/apps/news?pid=20601109&sid=a9wVqOPk.T_4&refer=home)

The "smartest" executives in business from around the world. Bunch of stupid FUCKERS! :mad:

I'm a conservative, but FUCKING HELL...businesses need oversight. IDIOTS! :(

I don't necessarily think that oversight should be a democrat or conservative issue... I see it more as a "keeping things sane" issue.

I'm amazed at the number of economists who were shocked -SHOCKED- that such a thing could happen because businesses would make sure to keep things on the level out of their own best interests.

This is the part that I wonder why nobody ever makes the connection: Just about everyone agrees that communism doesn't work because of human nature. Everyone is ultimately out for themselves. They'll work for the greater whole as long as there's something in it for them. But once shit starts hitting the fan, then they're only looking after themselves, everyone else be damned.

Now replace "communism" with "corporatism" and the same logic applies. Human nature doesn't change a bit whether people are contributing to the government, a company, or whatever. Was something magical supposed to happen when working for a business instead of to government or some liberal "society" and suddenly humans are honest and loyal to the company they work for? On top of that, when things are going REALLY well, the temptation to double-dip becomes too great. The lack of oversight only exacerbates this problem.

Now the carpet's being peeled back and we're seeing the economic foundation for what it really is: A rotting husk of a skeleton that was just barely holding things together, and it's almost too late to do anything about it as it's almost completely disintegrated.

At this point I'm pretty much convinced the best thing to do is just let the whole thing crash then start over again.

[Karmakin]

The only saving grace in this for me personally is that I bought a moderate home at a fixed rate in a moderate community, and have seen no devaluation of my property's value. Such is not the case across the country.

I think that there's a very good point in this. Personally I'm just renting right now. Prices are still too high IMO.

But frankly, I think that the idea that some people have put forward every now and then (including McCain, btw) is correct. Quite frankly, low temporary interest rates and outright greed put people into homes that they could not afford. So when interest rates went up, they couldn't afford the financing..and PFFFT.

I think there's room for a new type of economic conservatism. One that's focused on personal responsibility and being level-headed, and realistic and frankly, not about pipe dreams. However, we shouldn't put all the weight on the backs of the lower classes. We as a society see home ownership as an investment first and as well..a home second. When we financially reward people for the mere act of getting a mortgage...what message does that send? When we ooooh and ahhhh over beautiful houses on TV...what message does that send?

The idea that you're going to get people to sacrifice, in terms of an economy that both punishes them economically and socially looks down upon them for said sacrifice..quite frankly is insane.

[Johan]

I don't necessarily think that oversight should be a democrat or conservative issue...

It shouldn't be, but each party is certainly more inclined to exercise oversight of particular parts of our society, aren't they?

[Church42]

Greenspan is going to go down in history as the genius that never was. He now admits to having "made a mistake." (http://www.ft.com/cms/s/0/aee9e3a2-a11f-11dd-82fd-000077b07658.html) His mistake was pumping far too much easy money (low rates) into the economy, coupled with a lack of will to curb aggressive lending practices. The two (easy money and aggressive lending) combined to cause a gigantic real estate bubble, with millions on the hook for homes at unsustainable values on their mortgages, which subsequently blew up.

Don't confuse Greenspan's former job with the people that ran these mortgaging industries and the people on the street. Did he keep the interest rate that Federal Reserve banks use to lend to private banks, and hence, also keep the rate that private banks float loans to each other at? Sure. But he was pressured to keep the pressure on the gas pedal of the economy.

Is he in any position to dictate or enact legislation to combat lending practices? No. That's Congress' job. But he's been out of his job for awhile now and Bernanke should've been more aggressive in his rhetoric.

[Church42]

Plenty of blame to go around regardless. Yes, alot of people got left holding onto the mortgage of a house that isn't worth the value of the house itself, but for those in the younger generation (including myself), the rates at which housing values were climbing (and even still currently) priced us out. I think there is plenty of room for housing values to fall to, as I think most homes are still relatively overpriced.

Plus, I subscribe to the economic mindset that recessions are necessary & practical at times. Why delay it now when it seems like the market across the board could use some re-correction.