Greenspan: The Congress Was Responsible

[uscitizen]

"I am never wrong"

LOL, me neither except when I am.

I do not post about issues that I do not know. You, on the other hand always do and you look really stupid all of the time. I take it you were the product of defective DNA.

Apparently, But I guess none except you have perfect DNA.

why do I feel like a grizzly with a chichua(sp?) barking at it?

 

[antagon]

And you REALLY need to continue researching this if you think this doesn't go far beyond just Fannie and Freddie.

I go as far back as 1938, the Democrat push for home ownership via GSE's.

Or, to put it another way, do you believe that we would have arrived at the mortgage crisis, with its ramifications, if the free market, i.e., risk vs. reward - without the government interference- has been the only determining factor?

there's no such thing as a free market. what are you talking about 'no government interference'? who issues the money in the first place, PC?

if you narrow that to eliminating the GSEs, we wouldn't have much of a home-loan market in the first place... what you are presenting is nonsense...

i digress to working within your fantasy hypothetical: yes.. would still be likely to happen, and because of the other superseding factors which bubbled loans outside the CRA's redlines, and outside of fannie's residential sphere affecting a commensurate boom and bust in commercial property prices and lending.

the chief factor is the depressed interest rate from 02 to 04. im a greenspan fan, myself, and dont really feel he's the villain in the mix, but your OP cites his effort to dodge the bullet for his office playing a leading role.

as much as you would love to make this into a democrats-to-blame issue, our credit-funded war efforts represent the most plausible reason why the rates were rock-bottom and for so long. because the government decided to pop that deal on the credit card, banks were flooded with cheap money, way out of scope of their leverage, and consumers ate it up.

look at a fed fund rate timeline. that you have looked deep into the role GSEs have played has hardly enlightened you to what other factors were at hand, and you havent followed your market forces thinking to it source in the government, well beyond fannie mae.

 

[uscitizen]

Would GSE's have been as much of a problem had the interest rates not been held artificially low?
Or if the packaged NINJA loans and doubtful GSE loans had not been blended into finiancial packages and sold with a low credit risk rating?

 

[antagon]

Would GSE's have been as much of a problem had the interest rates not been held artificially low?
Or if the packaged NINJA loans and doubtful GSE loans had not been blended into finiancial packages and sold with a low credit risk rating?

CRA-spiracists dont pay any heed to NINA/HINA lending, alt-a ratings or, again, the window rate in their lil forensics. after neocons are blue in the face dictating 'the private sector this and that', they ignore the numerous admissions that these companies' chiefs have made as to their deliberate practices. when faced with an opportunity to recognize their market forces talking point in action, they turn away from the truth, and cobble together some public sector side-show act.

where's the credibility?

 

[Paulie]

Btw Neubarth, how's that DXD working out for you?

The Dow is only up like 1,000 points since you started saying it was a good buy.

Dumbass.

More of your insane lies you disgusting piece of shit. I never said it was a good buy. I spot trade DXD and long investments depending upon which way the market seems inclined to go. I have increased my return considerably over just being long the market.

Suuuuuuuuuuuuuure.

 

[Neubarth]

Would GSE's have been as much of a problem had the interest rates not been held artificially low?
Or if the packaged NINJA loans and doubtful GSE loans had not been blended into finiancial packages and sold with a low credit risk rating?

Interest rates were not "held" artificially low. Interest rates have always been determined by Supply and Demand in the marketplace.

The packaging of high risk loans into the crappola that was sold around the world was a big factor in the collapse. It was the old Hot Potato game all over again. Funny how nobody wanted to hold on to those taters. Thank heavens, the FED essentially bought them. The FED always is there to save our collective arses when we screw up BIG TIME.

God Bless the FED! It is the greatest institution ever imagined by the mind of man. We really do not need all of those building, though.

 

[georgephillip]

On Thursday, February 25, 2010 Ben Bernanke warned congress the US could soon face a debt crisis like the one in Greece, "and declared the central bank would not help legislators by printing money to pay for the ballooning federal debt."

 

[Neubarth]

On Thursday, February 25, 2010 Ben Bernanke warned congress the US could soon face a debt crisis like the one in Greece, "and declared the central bank would not help legislators by printing money to pay for the ballooning federal debt."

You can post all of the lies that you want on this forum as they do not care.


The fact remains that the Central Bank does not print money. You are a total fool to propagate lies like that. But what more can we expect from buffoons like you?

 

[georgephillip]

Would GSE's have been as much of a problem had the interest rates not been held artificially low?
Or if the packaged NINJA loans and doubtful GSE loans had not been blended into finiancial packages and sold with a low credit risk rating?

Interest rates were not "held" artificially low. Interest rates have always been determined by Supply and Demand in the marketplace.

The packaging of high risk loans into the crappola that was sold around the world was a big factor in the collapse. It was the old Hot Potato game all over again. Funny how nobody wanted to hold on to those taters. Thank heavens, the FED essentially bought them. The FED always is there to save our collective arses when we screw up BIG TIME.

God Bless the FED! It is the greatest institution ever imagined by the mind of man. We really do not need all of those building, though.

"Interest rates have always been determined by supply and demand in the market place."

Except for the most important interest rate of all.
"The one we exchange wealth in the present for wealth in the future."
"In normal times, the Fed--not the market--determines what the short-term interest rate is."

Wouldn't you think if there's one decision a "free" people would leave to their "free" market "...it would be the terms we trade present comfort off for future wealth."

Central bankers ARE Central planners.

The Fed is an island of central planning right in the middle of your "free"market.

It exists to protect the biggest (Wall Street) banks in the country and make them even bigger, and that's exactly what's happened over the last two years.

 

[antagon]

the question which ive got for you Fed nihilists, is what you would propose to affect par marketplace currency volume. the interest rates set by the Fed are market based to start with. they reflect supply and demand between them and clearing banks. if we collapse the shit, james madison, what would determine supply, demand, and volume at once? the treasury? god save us!

i say try that shit in mozambique or somewhere where the constitution doesn't grand powers to steward the currency and debt to the government.

 

[editec]

The ongoing argument as to the cause of the mortgage meltdown has yet to be settled, but since I have always championed the idea that the political pressure, mostly Democrat, from the GSE's Fanny and Freddie, and the CRA, etc., etc. and the resulting corruption of the free market, was the main villain, let me add a little more gasoline to the fire:

"Mr. Greenspan also told the Financial Crisis Inquiry Commission that his decisions were right 70 percent of the time during his 19-year tenure as the Fed’s chairman, placing much of the blame for the crisis on Congress and the credit ratings agencies. (As DealBook notes here, the hearing wasn’t without drama: the power went out in the middle of Mr. Greenspan’s testimony.)

“There is a presumption that the Federal Reserve is an independent agency, and it is up to a point, but we are a creature of the Congress,” Mr. Greenspan told the commission, which is holding hearings this week on subprime lending.

“Had we said we are running into a bubble and we need to start to retrench, Congress would have said, ‘we haven’t a clue what you are talking about.’”

“Demand for mortgage-backed securities was heavily driven by Fannie Mae and Freddie Mac, which were pressed by the Department of Housing and Urban Development and the congress to expand affordable housing in the U.S.,” Mr. Greenspan said. “During 2003 and 2004, the firms purchased an estimated 40 percent of private-label, subprime securities, almost all adjustable rate, newly purchased, and retained on investors’ balance sheets.”

Greenspan Again Defends Tenure as Fed Chairman - DealBook Blog - NYTimes.com

\
Greenspan is full of beans when he says

“There is a presumption that the Federal Reserve is an independent agency, and it is up to a point, but we are a creature of the Congress,”

THE FED sets the rates, folks.

It answers to NO ONE.

It didn't answer to NIXXON, or FORD, or CARTER or REAGAN when those presidents were complaining that the FED had set rates, too high.

Byt the FED went on the warpath to end STAGFLAGTION and the they used the only tool they had to do that.

They raised rates and raised them and raised them again until the prime rate reached about 21% during the Carter administration.

I watched my firm (I was in industrial travel at the time) go down the shitter because we couldn't borrow enough to keep going.

The parentage of this economic crises has many fathers.

Trying to pin it down to just one player or to just one party is plain ignorant

 

[Paulie]

On Thursday, February 25, 2010 Ben Bernanke warned congress the US could soon face a debt crisis like the one in Greece, "and declared the central bank would not help legislators by printing money to pay for the ballooning federal debt."

You can post all of the lies that you want on this forum as they do not care.


The fact remains that the Central Bank does not print money. You are a total fool to propagate lies like that. But what more can we expect from buffoons like you?

This is why you're an idiot.

When the word "print" is used, it refers to the Federal Reserve creating a specific amount of money that they add to their balance sheet to use for purchasing securities.

They most certainly do create money out of thin air in that respect. When they sell treasuries from their portfolio, this sterilizes the inflationary action of purchasing securities with that newly created money, because institutions that purchase those treasuries from them have just decreased their reserve balance. The purpose of this sterilization is to make that transaction zero-sum. The fed has not sterilized their securities purchases since September of 2008. Every purchase of securities since then has been with newly created money that was not offset by selling assets from their portfolio.

So while they haven't LITERALLY "printed" money, as far as the actual paper note is concerned, they most certainly HAVE created new money.

Seeing as how you obviously have no fucking clue how the Fed works, you really ought to bail out of this discussion.

 

[georgephillip]

the question which ive got for you Fed nihilists, is what you would propose to affect par marketplace currency volume. the interest rates set by the Fed are market based to start with. they reflect supply and demand between them and clearing banks. if we collapse the shit, james madison, what would determine supply, demand, and volume at once? the treasury? god save us!

i say try that shit in mozambique or somewhere where the constitution doesn't grand powers to steward the currency and debt to the government.

Rather than Madison how about Stiglitz:

"If we had used the $700 billion to create a new financial institution, allowed it to lever 10 to 1, which is very modest compared to the 30 to 1 that we were doing, 10 to 1 would have generated $7 trillion of new lending capacity, far in excess of what our country needs.

"So the issue here is not about lending. It's really about saving the bankers.

"And what we confused was saving the banks versus saving the bankers and their shareholders."

 

[antagon]

how does stiglitz patch up the deflation? we'd be way behind schedule with that shit in effect. whats the point of a new institution? when inflation heats up, increase the threshold... maybe then to stig's 10:1.

here's a quote of mine:

"the issue here is not about abolishing the fed, its about making another fed that plays into different hands"

 

[georgephillip]

how does stiglitz patch up the deflation? we'd be way behind schedule with that shit in effect. whats the point of a new institution? when inflation heats up, increase the threshold... maybe then to stig's 10:1.

here's a quote of mine:

"the issue here is not about abolishing the fed, its about making another fed that plays into different hands"

I don't know the answer to your question about how to patch up the deflation. By the standards of many who post here, I'm still at the "Economics for Dummies" level.

Your quote about "playing into different hands" is a good one.
It reminded me of one William Jennings Bryan made at the Democratic convention in 1886:

"We say in our platform that the right to coin money and issue money is a function of government...Those who are opposed to the proposition tell us that the issue of paper money is a function of the bank and the government ought to go out of the banking business.

"I stand with Jefferson...and tell them as he did, that the issue of money is a function of government and banks should go out of the governing business."

110 years later are we back to Bryan's Money Question and Cross of Gold?

 

[antagon]

how does stiglitz patch up the deflation? we'd be way behind schedule with that shit in effect. whats the point of a new institution? when inflation heats up, increase the threshold... maybe then to stig's 10:1.

here's a quote of mine:

"the issue here is not about abolishing the fed, its about making another fed that plays into different hands"

I don't know the answer to your question about how to patch up the deflation. By the standards of many who post here, I'm still at the "Economics for Dummies" level.

Your quote about "playing into different hands" is a good one.
It reminded me of one William Jennings Bryan made at the Democratic convention in 1886:

"We say in our platform that the right to coin money and issue money is a function of government...Those who are opposed to the proposition tell us that the issue of paper money is a function of the bank and the government ought to go out of the banking business.

"I stand with Jefferson...and tell them as he did, that the issue of money is a function of government and banks should go out of the governing business."

110 years later are we back to Bryan's Money Question and Cross of Gold?

that's a very interesting link there about the biggest little part of the healthcare bill.

otherwise, some economic advise is better stated than it is thought out. some of it is more political than it is economic at all. from my angle the fed beats any magic show in vegas, and its hard to knock its current performance. the last decade, cumulatively, is a demo that the treasury, and by extension the congress and executive can force the fed's hand without a word exchanged between them.

if i had to adjust something, i would start with our government's funding facilities. in the 18th century three branches of government did the trick. now, perhaps its time to introduce a power balancer which could knock the political capital out of the tax-spend clause. thats a whole different rant, entirely.

 

[georgephillip]

Would you be in favor of auditing the Fed? The lack of transparency, particularly at the New York Fed, leads me to believe the financial playing field in anything but level.

Just recently the Valukas report on the Lehman bankruptcy raises the possibility that the New York Fed, and Timothy Geithner, "...were at a minimum massively derelict in the performance of their duties, and may well be culpable in aiding and abetting Lehman in accounting fraud and Sarbox violations."

In this economic system the money seems to be absorbed into fewer and fewer hands with each passing generation. Soon being smarter than your competitor won't be enough to survive.

 

[KissMy]

There's too many of you who seem to have a real problem recognizing the role that cheap credit played in this mess.

How do you avoid the 1% interest rate we had early on in the decade, and the otherwise extremely low rates that were allowed to stay so low for so long thereafter?

1% fed funds rate = banks offer cheaper consumer loans.

As that rate rises, so does the price of consumer loans. Leave it low, and more people will borrow.

This doesn't mean there weren't other factors at play, but nothing else could possibly have contributed to the underlying demand for credit as much as the low rates did.

You are another first class idiot!

We have even lower interest rates now than at any time during Greenspans tenure, yet there are fewer loans being made. This is because lending standards are to high. The cause of the housing bubble was not the low rates, but the relaxed lending standards due to the GSEs & CRA.

 

[boedicca]

Without government interference it's MUCH less likely that we would have seen interest rates as low as they were after the dot-com bubble.

Without Government Intervention, we probably never would have had the dot-com bubble in the first place - or its impact would have been much less significant.

Money seeks assets. Bigger government, a loose money policy, and the Y2K Technology Mandate created a tech rush financed with Money Seeking Assets.

 

[antagon]

Without government interference it's MUCH less likely that we would have seen interest rates as low as they were after the dot-com bubble.

Without Government Intervention, we probably never would have had the dot-com bubble in the first place - or its impact would have been much less significant.

Money seeks assets. Bigger government, a loose money policy, and the Y2K Technology Mandate created a tech rush financed with Money Seeking Assets.

money seeks investment. i think that had real assets been involved there wouldnt have been as much an investment bubble as we had in 99.