lord_ek0 Wrote: ------------------------------------------------------- > Greenspan’s low interest rates were partially to > blame. The inflation that occurs through > expansionary monetary policy was absorbed by > leveraged assets; real estate. Another > significant piece is the Asian savings glut that > provided an oversupply of capital contributing to > the overleveraged economy of the aughts. Although > I do believe that GSEs/CRA may have played a > secondary role, as a libertarian leaning > conservative I get so sick of people such as Sean > Hannity and other panderers preaching that they > played a primary role. William F. Buckley must be > spinning in his grave. As a former GSE employee, it was quite apparent how entrenched the GSEs were into the housing market boom. It wasn’t just in the 2000s–this bubble was building up for literally decades as the GSEs issued countless trillions of dollars in liquidity into the capital markets. Lenders chase liqudity–Fannie, Freddie, FHA/HUD, VA, the FDIC and congressional tax law made residential real estate too enticing of an investment to avoid. There was incredible fraud and abuse at the lowest levels–originators, underwriters, investors, appraisers, etc.–because there was so much money to be made as a result of the enormous liquidity in the market, markets that the GSEs’ own financial models never foresaw in a million years would see 20+% declines. Those declines of 20+% proved fatal. The very fact that the 2 GSEs have been bailed out to the tune of $800 billion in 18 months should indicate to you how huge of a role they played in the housing boom.
some people are responsible, some people are not. the sad part of the equation is that alan had much experience and education (phd at nyu i believe) alan was the leader of this bubble. while i do not think it was directly his fault, i am disappointed in him. i think he personally feels disappointed with himself, although his press releases and book excerpts are all seemingly positive and do not take responsibility. the fact is - - is that the values were off in the u.s. as simple as it may seem - - it might be good for the person in this position to have some social skills and talk to their friends about life and their finances. if alan had friends (i do not think he had too many) and asked them about their home prices - - and thought about it - - it might have actually hit him and this country might have been able to face a different future than we are seeing currently.
AlphaSeeker Wrote: ------------------------------------------------------- > think Alan Greenspan is somehow responsible for > the financial crisis… > > Thoughts?? You are a dumb@ss if you think Alan Greenspan is somehow not responsible for the financial crisis… Thoughts?
Let’s not forget that Greenspan weighed in on fiscal policy with his “warnings” of budget surpluses. His credibility helped pass the disastrous Bush tax cuts.
LBriscoe Wrote: ------------------------------------------------------- > Let’s not forget that Greenspan weighed in on > fiscal policy with his “warnings” of budget > surpluses. His credibility helped pass the > disastrous Bush tax cuts. How exactly were the Bush tax cuts “disastrous”? Revenue held relatively steady between 2001 and 2006. It was the spending that was a disaster, but a spending spree that pales in comparison to the current level of spending.
Muddahudda Wrote: ------------------------------------------------------- > AlphaSeeker Wrote: > -------------------------------------------------- > ----- > > think Alan Greenspan is somehow responsible for > > the financial crisis… > > > > Thoughts?? > > You are a dumb@ss if you think Alan Greenspan is > somehow not responsible for the financial > crisis… > > Thoughts? i blame greenspan a litte more than the average person. the incredible pace of the housing market is a very large underlying factor of the mess - which he had incredible control over slowing down through adjusting rates. its a given that everyone and their mother (litterally) wanted the market to keep steamrolling. he mentioned congress as being the major hurdle to tamping down the market - but that, to me, is admitting he knew the problem and chose to not address it. there should have been tighter restrictions on lending and everyone looked the other way. totally greenspan’s fault - no - but was he allowing it to go on - yes.
The only thing Greenspan could have really done was push to raise interest rates. The housing boom was essentially caused by what every other major bubble was caused by–intense over speculation by amateurs, in this case, by families, foreigners (literally, they were huge purchasers/investors in condos in some of the worst hit markets), amateurish 20-something originators, etc. About 2/3 of Americans own homes, and add in your non-homeowners who invested in real estate or who work in the industry in some capacity–lending, construction, asset management, sales, etc.–and the municipal governments that made a lot of money and made everyone feel confident about their home values by raising assessments, add in your bank employees, most of Wall Street, insurance company employees, pension accounts, etc. and something like 4 out of 5 Americans were at least culpable in some manner for the boom and bust. Look, almost no one saw this coming (some did)–it’s so easy to Monday morning quarterback, but at the end of the day, we are guaranteed to see numerous bubbles and major busts throughout our lives. This was just one of them and it will happen again and someone else will be scapegoated.
Housing Boom = Fraud Bubble Even if interest rates were raised sky high this would not have stopped greedy “flippers” and so called “investors” from bidding up housing prices like houses were going out of style. Greenspan feel asleep at the wheel but the car happened to be a Toyota Prius experiencing unintended acceleration.