Black Swan Wrote: ------------------------------------------------------- > This discussion is stupid. > > There are trillions of dollars of mortgages > outstanding that were issued at too low of > interest rates or with poor underwriting > procedures… I agree with most of this, but gutting Glass-Steagal was done on Bush’s watch.
NakedPuts Wrote: ------------------------------------------------------- > Bush and Greenspan get top billing for creating > the whole mess in the first place. Look in my MSF class, we ran the regressions between the rates set by Greenspan and the FOMC and long term interest rates in the US. We sliced the data every which way and there is simply no significant correlation between the short term rates set by the Fed and the long term rates used to get mortgages. Particularly during times of Fed rate changes, this correlation nearly went to zero, in some cases even negative. Rate increases by the Fed, were typically followed only by continued declines in LT mortgages rates over that period. Greenspan has stated repeatedly that after decades of moving in lockstep fashion, the Fed rates decoupled from LT US rates in the late 90’s, essentially breaking the Fed’s most powerful weapon. Globalization and an expanding Asian economy (with higher systemic saving rates) caused a surplus in international investment. Given the long term stability of the US economy, much of it came here, pushing down rates. The Fed was fighting the markets and losing. I know there are quotes here and there that punish Greenspan and I know many pundits pile on, but quantitatively speaking, the data simply is not there. I’ve read Greenspan’s defense and honestly, I think it holds a lot of truth.
That’s because it’s about more than mortgages /sorry you wasted all that money on a useless MSF.
NakedPuts Wrote: ------------------------------------------------------- > That’s because it’s about more than mortgages > > /sorry you wasted all that money on a useless MSF. The Fed primarily controls short term rates through the FOMC, so please enlighten me.
Are you arguing the Fed has no controls over the economy except controlling the fed funds rate? As I noted above, the removal of Glass-Steagall was probably more to blame than any other single factor.
Black Swan Wrote: ------------------------------------------------------- > I’ve read Greenspan’s > defense and honestly, I think it holds a lot of > truth. so have i and there really isn’t much more he could have done to slow down the economy except for jack st rates sky-high. he gave caution to the overheating multiple times (everyone remembers the ‘irrational exhuberence’ speech) and absolutely no one wanted to be the person to tap the brakes on the run-away money machine we had going. greenspan was one man at a thousand-man banquet, sitting at the ho-hum chaperon table. no one wanted to be associated with his nannying or wanted to listen.
NakedPuts Wrote: ------------------------------------------------------- > Black Swan Wrote: > -------------------------------------------------- > ----- > > This discussion is stupid. > > > > There are trillions of dollars of mortgages > > outstanding that were issued at too low of > > interest rates or with poor underwriting > > procedures… > > I agree with most of this, but gutting > Glass-Steagal was done on Bush’s watch. My recollection is that Glass-Steagal was repealed in 1999, under Clinton. Bush did plenty to ensure that no one interrupted the frat party that followed, but he didn’t end Glass-Steagal.
NakedPuts Wrote: ------------------------------------------------------- > Are you arguing the Fed has no controls over the > economy except controlling the fed funds rate? > You haven’t answered my question, go ahead and enlighten all of us, since all I have is an overpriced MSF. You know why you haven’t answered? Because you can’t, you’re an idiot and everything I’ve said is correct. What’s your background that you would make such an ignorant statement to me? Oh, and nice job on Glass-Steagal being repealed under Bush in 1999, @ssbag.
You haven’t answered my question. How can you say that simple because the fed funds is their primary rate tool, a study done simply on that can hold Greenspan faultless. I don’t care that you did some regression and your professor decided it meant you could exonerate Greenspan. Plenty of people recognized the excess debt building up throughout the system (in places besides mortgages) and noted this to Greenspan and he did nothing. Glass Steagall was repealed by Gramm-Leach-Billey, so I’m obviously not incorrect about the party and philosophy at fault.
I dont have much to add but im in agreement with Puts on dis
Also I don’t need Glass Steagall to be repealed under Bush to add him to the list of causes.
NakedPuts Wrote: ------------------------------------------------------- > You haven’t answered my question. How can you say > that simple because the fed funds is their primary > rate tool, a study done simply on that can hold > Greenspan faultless. I don’t care that you did > some regression and your professor decided it > meant you could exonerate Greenspan. Plenty of > people recognized the excess debt building up > throughout the system (in places besides > mortgages) and noted this to Greenspan and he did > nothing. The Treasury issues debt, and Congress controls the budget, what are you blaming Greenspan for? He did all he was supposed to do within his role in the Fed. You said him and Bush are most responsible. I answered your question by saying, firstly that the Fed had no weapons with which to fight and honestly that is outside their mandate. If money is coming in overseas and pushing rates low and people are borrowing too much, and rates have decoupled, how is any of that on Greenspan? It’s like reasoning with a 2 year old. > Glass Steagall was repealed by Gramm-Leach-Billey, > so I’m obviously not incorrect about the party and > philosophy at fault. Yeah, I mean, all of your other facts were wrong, and you clearly put the blame on Bush with it despite the fact that he was a president and this was a congressional action. But then when it actually occurred in Clinton’s presidency, it’s now the Congress who’s at fault. Nice. But in some small way I’m sure you’ve decided that you are right.
NakedPuts Wrote: ------------------------------------------------------- > Also I don’t need Glass Steagall to be repealed > under Bush to add him to the list of causes. Now you’re just contradicting yourself, because you cited G-S repealed as prime reason Bush is responsible. You clearly have no argument. But go ahead, enlighten us. I mean, you haven’t put forward a good rebuttal yet, mainly just drivel, but humor me.
Just to be SUPER clear, since you’re an idiot, this is the main point I’m still waiting for you to address. NakedPuts Wrote: ------------------------------------------------------- > Are you arguing the Fed has no controls over the > economy except controlling the fed funds rate? Yes, it is their primary, and most potent form of control. Given the surplus of investible global funds created by the Asian rise previously described, what exactly are you suggesting Greenspan should have done differently, and with what Fed tools. In other words, HOW DID HE IN PARTICULAR CAUSE IT?
Black Swan Wrote: > what are you blaming Greenspan for? > He did all he was supposed to do within his role > in the Fed. Totally agree. People, especially the left, put too much blame on Greenspan…
“because you cited G-S repealed as prime reason Bush is responsible” This is incorrect, I cited Bush as responsible, and G-S repeal as a primary cause of the crisis. I was mistaken in connecting the two, although as noted, the political and economic philosophy that drove the G-S repeal and guided Bush throughout his term are essentially uniform. Clinton deserves blame as well, partially for signing G-L-B, but more for the rapid expansion of the GSEs under his watch. I’m not going to address your strawman “What he did” question. Obviously with something as large and complex as the financial crisis, there’s no “He did X, and caused Y” connection. He’s the most powerful person in US finance, and yet he’s powerless to stop this? I reject that outright. Even if his direct tools proved somewhat ineffective, he was viewed as the most respected voice on monetary policy, and any inkling from him that things should change would have rippled through the system quickly. Instead, we got stuff like this: http://www.fool.com/investing/general/2008/10/15/5-alan-greenspan-quotes-that-make-you-wonder.aspx Get your head out of the books and into the real world.
My rebuttal is my original post. Greenspan is not responsible for the irresponsibility of a nation
Did your “study” address what happens to ARM rates tied to the prime or LIBOR when the fed funds rate changes? Because I have some bad news for you about that… http://en.wikipedia.org/wiki/File:Federal_Funds_Rate_1954_thru_2009_effective.svg http://en.wikipedia.org/wiki/File:Ted-Spread.png
So basically, you’re saying, put a man in a government role governing short term rates and money supply within a FREE MARKET economy using limited tools. When he doesn’t turn out to be an infallible super human god creature with the ability to control what’s beyond his control, scapegoat full blame on him when external factors combine with the nations greed to bring down the economy. But above all, ignore the fact that the tools assigned to him no longer work and he has a very limited role providing regulatory oversight of the money supply. Also ignore the fact that for roughly 20 years we had consistently healthy inflation numbers (his main role), something no other Fed Chairman had provided prior. Oh, then supply no accurate facts but refer to other’s points as strawmen while covering a lack of education by calling them academics as well (despite the fact that they work in the field).
BS - Interesting point, never thought of it that way. Was the Asian debt crisis in the late 90s responsible in part for capital inflows into US securities?