Greenspan's Folly

I appreciate the quality of your info, Old Joe, but I'm not in business. I'm just trying to understand what's the fuss and difference between the 85 billios and the waterfalls of money open wide by the First Chimp.
I'll stay put

Surely enough I sort of understand that government putting any money into the market goes against the idea od a free market system. In this particular case we're talking about 85 billion bucks, which has the sound of a fairly big intervention. Still, I fail miserably to understand or grasp what's the effect of the huge amounts of billions coughed up by the current and silly Bush Administration to keep the Iraq war alive. And I'm not talking about the money actually spent in Iraq and its surroundings. I'm talking about all the money bouncing back from Iraq to the USA and landing in the pockets of Halliburton, Bechtel, Blackwater just to name the big ones because I've no idea who else is pockecting the rest of it. Doesn't it all end up in the US economic system?
Is that not an horrendous market intervention?
Please give me some help in here!!

Everytime I see Greenspans wife Andrea Mitchell on TV it makes me want to puke. How can NBC keep her as an analyst in good conscious. She has no credibility. The Federal Reserve Chairman is arguably the most powerful man in America. It would be like having Hillary Clinton as a political analyst. Greenspans fingerprints are on almost everything. Let's put an end to corporate welfare! All the ghetto welfare queens combined have not wasted as much taxpayer money as even one of these brokerage houses.

What's awful here is that banks worth billions are now in debt and bankrupt and looking for taxpayer money to clean up their mess. It is one thing to suggest that we are all culpable as consumers, but consumers at the street level had no idea what a mess the higher-ups on Wall Street were making of the economy because of their high stakes gambling with securities. And it was gambling. But ultimately, all of these banks, insurance companies et al who are in trouble, and we are not yet at the bottom of that pile, look to the Feds for salvation, when they wouldn't look to the Feds for regulation. Help us, they whine, while the taxpayers stand transfixed like a deer in headlight because who knew we were going to be paying for not only bad mortgages but bad business decisions as well? Where is this money going to come from -- hundreds of billions to save banks who were run into the ground. I wish we could just let them founder, but we can't, to save the global economy, we are now forced to shore up these megalithic beasts. But where, again I ask, is this money coming from? And why do we have money to save mutilated investment banks and deceptive wars, but no money for health care (too expensive!), Social Security (you're on your own!) and education (raise the tuition!)

There is more than enough blame to go around: several sessions of Congress, the CEO's on Wall Street, the mortgage brokers, the credit agencies, Bush, Clinton - the list goes on and on. Lots of people along the way had the option to choose prudence over greed, and didn't.

But if we are going to point fingers - America's number one pasttime - we need look no further than ourselves.

As a society we believe in bigger, better, more. We drive cars we can't afford, run up our credit cards for luxuries we don't need, live beyond our means in every area of our lives. Do we really need houses with 3-car garages? As George Carlin said, we need a place for our stuff. Even if it is for stuff we don't need.

We even teach our children that it is acceptable to incur debt to finance college educations - we need "good paying jobs" so we can be good little consumers. And so we can pay off our college loans.

Somewhere along the way, we stopped focusing on what was important. Yes, the thinking goes, I work hard for my money, I can spend it on whatever I want.

Spend it, yes. Borrow against the future - maybe not.

There is no question that there have been criminal acts, negligent acts, and irresponsible acts. Retribution is satisfying, and reform is necessary.

But some individual soul searching on each and every person's part is ultimately the only way we can prevent this from happening again.

Sadly, it seems we would rather point fingers outward than look inward.

John McCain knew that Fanny Mae and Freddy Mac would collapse, and thereby unjustly burden the American public!

In 2005, Senator John McCain cosponsored the Federal Housing Enterprise Reform Act to regulate the powers and procedures of Fanny Mae and Freddie Mac.

These 2 massive federal finance agencies had been operating without controls in a blatant irresponsible manner, and had been found guilty in court of falsifying financial records and statements in order to provide supposed justification for bonuses to be given to their higher echelon administrators.

These 2 organizations had been coerced by Democrats, who because of political opportunism, wanted them to grant mortgages to individuals who would be unable to make their required monthly payments. That would be in accordance with the irresponsible Democrat belief that everyone should be entitled to have their own home, irrespective of their actual ability to afford that luxury.

Both of these mortgage lending institutions have contributed massive financial sums to support the political aspirations of Chris Dodd and Barack Obama.

Senator John McCain realized 3 years ago that fraudulent transactions were rampant within these 2 enterprises, and that they would soon collapse if remedial action was not undertaken. Their bankruptcy would result in the American taxpayers having to go into debt to resurrect or ???bail-out??? these fraudulent Congress protected entities.

As was to be expected, this proposal to institute meaningful financial reform measures was obstructed by the Democrats in the Senate, and the proposal failed to be adopted.

This year, due to the Democrat furor over the collapse of Fanny Mae and Freddie Mac, the American taxpayers are burdened by having to pay a minimum of 450 billion dollars to ???bail out??? these 2 recklessly managed lending companies.

John McCain exposed and opposed the corrupt lending practices of Fanny Mae and Freddie Mac. Barack Obama ???milked the system??? and profited by obstructing reform of their corrupt lending practices.

Democrats have demonstrated that they can wreck the mortgage industry.

Are you willing to vote them into office, and give them a blank check to mismanage the American economy, security, and health care?

This is Barny Frank's Folly! Politicians had their election campaigns fattened threw fanny/freddy and the were DEMS! Blaming Greenspan is a political expedient by irresponsible Congressional members! This is why the approval of the congress is so poor!

FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005

Sen. John McCain [R-AZ]: Mr. President, this week Fannie Mae's regulator reported that the company's quarterly reports of profit growth over the past few years were "illusions deliberately and systematically created" by the company's senior management, which resulted in a $10.6 billion accounting scandal.

The Office of Federal Housing Enterprise Oversight's report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae's former chief executive officer, OFHEO's report shows that over half of Mr. Raines' compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator's examination of the company's accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac--known as Government-sponsored entities or GSEs--and the sheer magnitude of these companies and the role they play in the housing market. OFHEO's report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO's report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

I urge my colleagues to support swift action on this GSE reform legislation.

http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-190

We need a negligence standard for CEOs and CFOs so that if a company "cooks the books" its executives go straight to jail. As is, these guys get huge multi-million dollar severance packages. The negligence standard is something that Greenspan privately discussed with Paul O'Neal, the Secretary of Treasury from 2000 to 2002. The measure would go a long way in helping avert stock market problems.

The book:

The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O'Neill by Ron Suskind.

Bottom line: Karl Marx was right after all. Give capitalists sufficient rope, and they will surely hang themselves. It is happening now.

In a 2006 Washington Post article, Steven Pearlstein said that, " Greenspan's most important contribution has been as the policymaker who... engineered the wholesale deregulation of the U.S. banking and financial system. .. his most enduring legacy is an American economy that is more "prone to assets bubbles, corporate scandal and financial crises..." That about sums it up.
continuing to deliver long-term economic growth.

Deregulation is a good idea. Regulated economies will be at a disadvantage in 21st century global commerce.
If you need somebody to blame for the current financial flameout, blame the ratings agencies. Sure the bankers and investors were fools to trust them, but S&P, Moody's, and Fitch could have said "we don't understand this stuff" instead of reassuring the suckers that trash was as good as gold. They didn't just fail to do their jobs, they lied.
No regulation will wise up the suckers, only experience.

Let's see. The regulatory powers were granted to the Fed in 1994, in the last year with a Democratic congress and president. The weak national regulators were created (perhaps to undercut state regulators?) under a Republican congress and president. Glass-Steagal was repealed under the sponsorships of Phil Gramm (a Republican).

Do you think, perhaps, the problem has been that the Republican party has been opposed to almost any regulation of any industry?

Deregulation was, and is, a good idea. Regulated economies will be at a disadvantage in 21st century global commerce. If you need someone to blame for the present flameout, look to the ratings agencies. They graded all that paper as "investment grade" even though they didn't understand what it was, much less what it was worth. Sure the bankers and investors were fools to trust them, but what S & P, Moody's, and Fitch did was worse than incompetent - it was crooked. They could have said "it's over our heads" but no, they told their clients that trash was as good as gold.

Well since people want to blame a political party for this mess, let's say Obama does get elected but now that subprime lending is kaput all the people he promised to help .... won't be able to buy houses. Bye, bye American dream. As I heard on the news the other day as the Dow dropped 500 points, credit will tighten up dramatically and to quote a banking official, "if you bad credit you can't get a house, car or credit card. Instead of a chicken in every pot as promised, poor people will still only be able to afford beans and rice.

What a terrible Irony.

Good judgement ceases to guide business when failure is less than fatal. It's just that simple. Once you start installing safety nets....or prove via bailouts that companies won't be allowed to fail....apparent risk is driven to zero and self-discipline goes out the window. Regulation is seen as the antidote. It isn't ....it's a patch. Failure must be permitted....and even celebrated as the determining factor of a healthy marketplace.

Chrysler should have been allowed to fail. Everyone says, "but what about the lost jobs and damage to the economy?". My answer is this: Ford and GM would eventually fill the void and both of those solvent companies would have prospered. No one will ever know how that might have worked to the benefit of the economy. In the end, saving Chrysler was a market manipulation directly against Ford and GM. Interestingly, Chrysler still failed...and both GM & Ford are in trouble.

Good judgement ceases to guide business when failure is less than fatal. It's just that simple. Once you start installing safety nets....or prove via bailouts that companies won't be allowed to fail....apparent risk is driven to zero and self-discipline goes out the window. Regulation is seen as the antidote. It isn't ....it's a patch. Failure must be permitted....and even celebrated as the determining factor of a healthy marketplace.

Chrysler should have been allowed to fail. Everyone says, "but what about the lost jobs and damage to the economy?". My answer is this: Ford and GM would eventually fill the void and both of those solvent companies would have prospered. No one will ever know how that might have worked to the benefit of the economy. In the end, saving Chrysler was a market manipulation directly against Ford and GM. Interestingly, Chrysler still failed...and both GM & Ford are in trouble.