January 23, 2008

Dean Baker throws Alan Greenspan under the bus as his precious $8 trillion housing bubble explodes


"It was easy for any competent macroeconomist to recognize that the housing market was in the midst of an unsustainable bubble. By its peak in 2006, the run-up had generated more than $8 trillion in housing bubble wealth. It was inevitable that this bubble would burst and wreak the sort of havoc that we are now seeing.

The housing bubble was allowed to expand to such dangerous proportions because the Fed was not run by a competent macroeconomist. It was run by Alan Greenspan, who used to be the greatest central banker of all time.

Greenspan did nothing to stem the growth of the bubble. In fact, he encouraged its growth by recommending that people take out adjustable rate mortgages. He also dismissed the views of the competent macroeconomists who tried to warn of the bubble, assuring the markets that everything was under control."

19 comments:

Anonymous said...

So, with all the cuts underway, what's the next asset bubble?

Whatever it's, I'm throwing the towel and joining all the crooks. I'll rape this country just like everybody else: From the White House to Wall Street to the Hotel Mexican Maid.

No more Mr. Nice Guy. Next bubble, count me in!

Anonymous said...

Somebody give Rick Santelli his own program already! He's the only one who makes sense out there.

Anonymous said...

Greenspan is a tool.He pumped it up to distract from the war that bushboy badly wanted. Americans bbq`ed while Iraqis burned.

David said...

GreenScum! Go work for the hedgie!

You screwed us over.

Anonymous said...

We really nee to bring back the tradition of running people out of town on a rail, or tarring and feathering. Instead they get golden parachutes.

Стивен said...

Next bubble here. (Great Harper's cover next month too!)

Veronica Lodge said...

RE: $8 Trillion housing bubble explosion...

From today's San Francisco Chronicle:

"Waveline and Edward Payne have owned their San Pablo home since 1965. Their monthly mortgage payments are $3800."

They OWN their home?!?! I don't think so!

Their monthly income is $4000 and their mortgage payment is $3800 -- due to adjust up $738 in April. Until three months ago, they were paying off credit cards and the mortgage with refi cash.

The house has been refinanced over and over to the tune of $505,000 and is supposedly worth $465,000. Now, the bill has come due and they are up sh!t creek without a paddle. They face having to give up the house they can't afford.

Oh well, it was good while it lasted. But all that free money had to dry up sometime. The newspaper article presents this story as a tragedy -- the end of an American dream.

So what's next? Will they be moving to Greenspanville? Or maybe they could just walk away from the house, rent a place for a fraction of their mortgage payment and live within their means.

There are eight million stories in the Naked City. This has been one of them.

V.L.

Honest Abe said...

GreenScum! Go work for the hedgie!

You screwed us over.

January 23, 2008 2:22 PM

He always was working for the hedge funds. Why do you think the Queen bestowed Knighthood on that old prune?

Sir Isaac Newton said...

It was apparent that Greenspan was a complete and utter fool when in the early days of the subprime crisis coming to light in 2007 he publicly stated, "this whole sub-prime problem would go away, if only housing prices increased another 10%".

Well, DUH.

And if you jump out of a plane without a parachute, then gravity is not a problem UNTIL you hit the ground! His statement was like saying, "Gosh, I sure wish the ground below was at sea level, and not 1,000 ft"! Granted, it gives you a second more before impact, but the outcome will be the same....

g said...

Just like W, history will not be kind to this man.

Anonymous said...

Just like W, history will not be kind to this man.

Time for real men to pull their heads out of their asses. History will not be kind to any man who allows other men called bankers, to enslave their wives and children. The innocent will suffer terribly for what these central bankers have done. They need to be destroyed if the word freedom is to have any meaning for us.

Merciless Ming said...

While he may be evil as hell, I don't think Alan Greenspan is any dummy. I'm sure he knew exactly what he was doing when engineering the great real estate bubble that's now imploding. He may have even been amazed at the incredible stupidity of millions of suckers that took the bait and bought insanely overpriced houses financed with suicide loans.
He bailed out just before his time bomb went off and dumped the mess into the lap of Ben Bernanke, who appears to be completely incompetent to deal with the crisis.
I can see, in my minds eye, the old weasel, Greenspan laughing his head off as the tragedy unfolds.

Anonymous said...

So what's next? Will they be moving to Greenspanville? Or maybe they could just walk away from the house, rent a place for a fraction of their mortgage payment and live within their means.


I bet they could rent the same type of house for $2500/mo or a decent apartment for under $2000/mo instead of paying $4500/mo for a run down old house. That's before taxes, insurance, maintenance etc etc. Instead of feeling sorry for them, I am happy that the lender will foreclose on them. Their lives will be better and less stressful going into retirement. They will have more time to enjoy life, more disposable cash and fewer bills to worry about.

Anonymous said...

The borrower is slave to the lender. Free yourselves from the shackles of the bankers.

Anonymous said...

yeah it was Greenspan that forced people to lie about income on mortgage apps

it was Greenspan that forced people to refi over and over so they could buy cars and boats

it was Greenspan that put a gun to mortgage brokers and told them to do away with any sort of lending criteria, ie use the mirror test

you idiots claim to be libertarian. some libertarians you are when at the slightest problem you cry out for government help

Anonymous said...

you idiots claim to be libertarian. some libertarians you are when at the slightest problem you cry out for government help

January 23, 2008 9:11 PM

Youre wrong. I claim Libertarians to be idiots. I have no problem with Gov intervention to regulate and protect the productive economy and the citizens (sometimes from themselves).

I would have never allowed this country to be de industrialized and de regulated to the point it has become a carcass for international financial speculators to feed off of.

Lady Di said...

Everytime I see Greenspan's "Age of Turbulance" book at Costco I want to throw up.

The man is a sell out. He sold his soul to the establishment and helped put the economy in the toilet.

I hope that before Greenspan dies, he is aware of what a complete failure he was as Fed Chief. He deserves no less.

Damn right I am angry. Grrrrrrrrr!

WINGS said...

Merciless Ming said:

I can see, in my minds eye, the old weasel, Greenspan laughing his head off as the tragedy unfolds.
_____

That's right!

But even worse than that, he's sipping fine champaigne and eating caviar while his feet are being rubbed and his toes sucked by a fine, blonde Playboy bunny, as he overlooks the city below from his multimillion dollar bungalow.

He lives in pleasure, luxury and sleeps in late all warm and cozy...
as Rome burns!

I'm pissed off about that!

He doesn't deserve pleasure and ultimate luxury and rest.

Damn him!

Anonymous said...

Someone should have thrown the entire Fed under the Bus along time ago.