How Alan Greenspan Destroyed America

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http://www.alternet.org/how-alan-greenspan-destroyed-america



Alan Greenspan will go down in history as the person most responsible for the enormous economic damage caused by the housing bubble and the subsequent collapse of the market. The United States is still down almost 9m jobs from its trend path. We are losing close to $1tn a year in potential output, with cumulative losses to date approaching $5tn.

These numbers correspond to millions of dreams ruined. Families who struggled to save enough to buy a home lost it when house prices plunged or they lost their jobs. Many older workers lose their job with little hope of ever finding another one, even though they are ill-prepared for retirement; young people getting out of school are facing the worst job market since the Great Depression, while buried in student loan debt.

The horror story could have easily been prevented had there been intelligent life at the Federal Reserve Board in the years when the housing bubble was growing to ever more dangerous proportions (2002-2006). But the Fed did nothing to curb the bubble. Arguably, it even acted to foster its growth with Greenspan cheering the development of exotic mortgages and completely ignoring its regulatory responsibilities.

Most people who had this incredible infamy attached to their name would have the decency to find a large rock to hide behind; but not Alan Greenspan. He apparently believes that he has not punished us enough. Greenspan has a new book which he is now hawking on radio and television shows everywhere.

[trumad]

1. Bookmarked for a later read.

Thanks

[Hubert Flottz]

2. Alan GreedSpin is the very asshole who

started the right wing's full court press attack on Social Security.

[xchrom]

3. +1

[B Calm]

4. and Andrea Mitchell Greenspan is so proud of him. . .

[Hubert Flottz]

23. I'd hate to see a pup out of those two.

[DonCoquixote]

5. Ayn Rand

The gift that keeps on giving (via her followers, who are as half baked as any religous fundies).

[sendero]

13. Obviously...

.... more Randian fail from another deludinoid who refuses to acknowledge that had he merely DONE HIS JOB this mess could not have happened.

[MannyGoldstein]

6. You say that as if it's a bad thing.

Remember - there were losers and winners.

Suckers!

Regards,

America's Bankers

[xchrom]

7. !

[Scuba]

8. "Free hand" Alan Greenspan ...

[LuvNewcastle]

9. This author is completely right.

I think Greenspan was totally aware of the situation and what could happen, but he was so sure of his Friedmanite economic views that he wouldn't do anything about it. Like a lot of others we have in high places in this country, he decided to double down on failure rather than acknowledge that what he is doing is not only not working, it's putting the economy in grave danger. I still don't think he and the others have learned their lesson. I'm sure they still believe that they didn't deregulate enough and that's what caused the whole disaster.

As the author says at the end, anything Greenspan writes should be a mea culpa and a complete renunciation of neoliberal economics. Of course, he and the rest won't learn a thing unless it lands them in jail and costs them a ton of money. Unfortunately, none of them have seen the inside of a jail and they've all made tons of money from this disaster.

[joshcryer]

10. The Democrats aren't immune.

The Democrats, with good intentions, tried to get more and more people to buy houses. The idea was that rent is detrimental to the base (which is is) and the Democrats envisioned helping poorer or lower level people to buy houses. They didn't consider, unfortunately, credit default swaps, and how they would play into to the ultimate destruction of mortgages, nor did they consider that adjusted rate mortgages were ultimately a scam of epic proportions. The Democrats fucked up, but ultimately the Republicans are responsible because they allowed this shit to begin with, thinking that the magical markets would solve everything.

[hueymahl]

15. +1 - It doesn't help the future

To ignore parts of the past where our team screwed up too. There is PLENTY of blame to go around, as other posters have so ably pointed out.

[joshcryer]

17. It's a damn shame.

The Democrats wanted more people to be owners as opposed to subservient renters, but it backfired. If only they looked at credit default swaps and were forward looking! They would have saw it coming and Fredie Mae / Mac would've survived.

[Nye Bevan]

11. "Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble" - Paul Krugman 8/2/02

http://en.wikiquote.org/wiki/Paul_Krugman

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

[sendero]

14. Plenty of fail to go around..

... however none of this could have happened without:

The passage of the Commodity Futures Modernization Act, which enabled the toxic derivatives (MBS) that drove this entire bubble

and

the ridiculous free money (artificially low interest rates to keep Bush from having to deal with a recession) policies of the Greenspan Fed.

Remove either of these and the bubble could not have happened.

[redqueen]

20. Any particular reason you edited that quote and gave no indication of having done so? Full quote:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

[Nye Bevan]

21. Happy to give the 4 paragraphs max:

A few months ago the vast majority of business economists mocked concerns about a ''double dip,'' a second leg to the downturn. But there were a few dogged iconoclasts out there, most notably Stephen Roach at Morgan Stanley. As I've repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever.

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.

On the surface, the sharp drop in the economy's growth, from 5 percent in the first quarter to 1 percent in the second, is disheartening. Under the surface, it's quite a lot worse. Even in the first quarter, investment and consumer spending were sluggish; most of the growth came as businesses stopped running down their inventories. In the second quarter, inventories were the whole story: final demand actually fell. And lately straws in the wind that often give advance warning of changes in official statistics, like mall traffic, have been blowing the wrong way.

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

[delrem]

12. Alan Greenspan didn't do anything that the USA didn't ask him to do. nt

[redqueen]

22. Alan Greenspan didn't do anything that *shortsighted investors* didn't ask him to do. nt

[FairWinds]

16. John Stewart had Greenspan on his show .

a short time ago. I could not watch the whole thing, but it from what I saw Stewart was WAAAY too nice.

[LuvNewcastle]

18. I saw it, and he was way too nice.

Greenspan came across like everybody's grandpa and Jon let the old bastard pimp his fucking book. Made me sick. I would've nailed the old bastard to the wall and kicked him a few times for good measure.

[marmar]

19. k/r