September 14, 2007

Another mortgage meltdown mea culpa: Alan Greenspan admits he screwed the pooch, didn't read HousingPANIC


Too bad a bunch of volunteer bloggers understood the issue better than the economist who was in charge of our banking regulations, money supply and economy.

Americans, Alan Greenspan's incompetence has led or will lead to the downfall of the American homebuilding industry, the loss of $10 Trillion+ of wealth, millions of lost REIC and associated jobs, ruined families, millions of foreclosures, and the implosion of the world financial system.

Whoopsie - my bad. Mulligan?

Greenspan Acknowledges He Failed to See Early on the Risks of 'Subprime' Mortgages


WASHINGTON (AP) -- Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy.

In an upcoming interview, Greenspan said he was aware of "subprime" lending practices where homebuyers got very low initial rates only to see them later jacked up, causing severe payment shock. But he said he didn't initially realize the harm they could do.

Critics say the Fed kept rates too low for too long, encouraging a Wild West mentality in housing.

Greenspan, however, defended the institution's actions.

"They are mistaken," he said of the critics. "It was our job to unfreeze the American banking system if we wanted the economy to function. This required that we keep rates modestly low," he said.

27 comments:

Anonymous said...

Talk about some Monday Morning Quarterbacking!!! Did he bother telling anyone about the biggest real estate crash ever to happen in the history of the world? Nooooooo!

Just so you know Allen, lowering interest rates will only create more market turmoil and cause folks to have to ask for huge wage increases to keep up with the inflation. Come on how about a little Econ 101!

I am losing confidence in the economic team! The only folks who have it right are the blogs!

Keep up the great work Keith!

Anonymous said...

Always wanted to use a hundred dollar bill as A$$ wipe paper. Unfortunately it may be cheaper than the real thing soon.

the real peyton manning said...

Al knew what was happening every step of the way. What a dick.

Mark in San Diego/Zurich said...

Fed officials should be forced to shop at a Safeway/Kroger once a week, talk with Walmart customers once a month / IN a WalMart, and get out of their Ivory Towers and read a few nasty blogs once in a while. . .remember the George Bush the First who "marveled" at scanners at supermarkets?. . .he just couldn't believe they had these "new fangled" things. . . .duh. . I think they had been in service for about 10 years at that time. . .wonder if Greenspan has ever used an ATM?

OwenF said...

Greenspan is Dopes. We convinced him, finally, when the bubble went pop a few weeks back. Up until then he still believed that they weren't making anymore land.

Anonymous said...

So, what should he have done?

I look at this, and all I see is "damned if you do, damned if you don't."

If he pushed for restrictions of subprime mortgages, he would have been accused of being racist, of denying the poor the homes they so richly deserved because they are living paycheck to paycheck through no fault of their own.

Now we know where that got us, along with the other measures that were intended to make housing more affordable (a worthy goal!), but got abused by flippers and speculators.

If Kerry had been elected in 2004, it would have ended up exactly the same.

Bush shares blame, just like Clinton shares blame in the dot.com bust. We learned from that, and we'll learn from this one.

Anonymous said...

Greenspan could have spoken out on the fraudulent liar's loans that was at the root of the fraud. It wasn't subprime that drove the price of a starter home to $500,000. It will be the liar loans that will push this country into recession. I hope the REIC is happy. Even the Mexicans won't want to stay here the next few years.

edenz said...

guys, ease up on Al , ok.
Al's the maestro. ya, he da MAN.
If he were still the Fed's chairman, there wouldn't be no housing crisis. No sirree, easy Al would have put things right.
Hey, Al, where you going, man ?
No, no, that ain't the way to the Fed, man. And quit trying to CYA, man.
They's gonna think you is really senile.

Anonymous said...

Thats because he got his degree from the Internet....hmm.

Anonymous said...

From Money.CNN.com.

"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late," he said a CBS "60 Minutes" interview to be broadcast Sunday. "I really didn't get it until very late in 2005 and 2006," Greenspan said.

Typical financial expert escape clause.

Anonymous said...

Alan Greensperm is a disciple of Ayn Rand. What more does anyone need to know.

Anonymous said...

This guy knew exactly what he was doing and they will keep doing the same sh*t.

Anonymous said...

You mean people with bad credit don't pay their bills?!?!

WOW!, Who would have ever thought that!

Edgar said...

STFU Greedscam, I'm sick of your ugly mug. Friggin' Vogon. Go count your money or something slime ball.

Anonymous said...

As taxpayers, we are NOT getting our money's worth given the salaries and perks that these people "earn". The people who are even more stupid are the university types paying this type of clown huge sums for speaking fees. I'm like, "Tell you what, I'll come and give you my opinions and insights from a podium for $5,000, free eats and drinks and a entry to an all night frat party with strippers after my speech - how's that for a bargain? And, I might actually have a better track record in prognosticating than old bubbles."

Smug Bastard

Anonymous said...

All Greenspan was concerned with was getting out of Dodge before the shit hit the fan. What a piece of garbage.

laffy taffy said...

Greenspan drank the Koolaide a long time ago. Why didn't they ask him about the dotcom bust? After all, it was his $2 trillion liquidity injection in '98 (Y2K fears) that fueled that one too.

"We are all Keynsians now"
-R. M. Nixon, 1971

"All you assets are belong to us!"
- Chinese Paramount Leader, Hu Jintao, 2009

Ron said...

Greenspan could have stepped in, he could have done much. People who would throw the racist label around are just trying to grasp at straws. Problem is that since the 1980's the economy has been based on bubblenomics and that has been viewed as the way to make a Country grow healthy. I guess we are back to the 70's now.

NOVA said...

Yeah, he sure kept it "modestly low". What's "really low"??? -5%?

Daphne64 said...

In 2001 Greenspan received the "Enron Award for Distinguished Public service."

That's seeming less ironic and more prophetic all the time.

Anonymous said...

I don't know if many of you have
thought of this:

Even people with liar's loans have
to have a roof. However they make their money, most have enough to pay
some kind of rent...

If the house price hadn't been jacked up beyond reason (waaaayyyy beyond
any explanation), and loans hadn't
included kickbacks to the seller,
and no loans for down payment
had been allowed, and no reset,
just straight 30 year mortgages,
most of those liars could afford
to pay for their shelter...they
were paying for it somewhere else,
weren't they?

It was a bubble and those who gave
the mortgages and the realtors
made out very well, because their
window of responsibility was very
short in time. Those who bundled
the paper also offloaded it quickly
to others who hoped to offload and
now are having to deal with what
it's really worth...often banks,
where everyone keeps their money...

These short term loan floats being
made to holders of these bundles
of hot paper ....hm...what do you
want to bet the government/fed gets
burned because I don't think this
gamble can be pulled off...it's just started and it's going to get
ugly...

Especially because some of these
mortgage lenders are linked to banks.....how do you say Bank Holiday?

The real problem seems to be human
hubris.. and no sense of history.
We are living long enough that
those who lived what we will soon
experience are largely gone, and
no one wants to listen to them
anyway...so the potential for
a big blowup wasn't on anyone's
radar...

Bummer.

Grandma PKK

Anonymous said...

I got more respect for Greeny now that he has admitted his faults.

I think we need to stop bashing him, he came out clean and his finally realizing the consequences of this imminent financial failure that we are about to experience.

Anonymous said...

Greenspan is nothing but a cheap front man

Anonymous said...

Orwell beams with pride. I guess 1% on fed funds was "moderately low." You go, Al!

Edgar said...

Go polish your medal or something Greenslime.

Anonymous said...

It's amazing how one man and his little committee can have such a negative affect on my life. Th inflation and skyrocketing home prices has hurt my family and future a great deal. FIrst housing will fall and then we canenjoy higher inflation. God bless the USA

Anonymous said...

Mulligan.....Now that's some funny S%$#