If Greenspan says he didn't understand, does this mean the myth that Fed governors, Treasury secretaries, etc have any clue about the economy can disappear?

Cue Crameresque explosion 'They have no idea what they're doing, no idea. They're making it up as they go along. Bernanke knows the sun will come up and leaves go red in autumn. Other than that he has no idea, no idea.

Also, wasn't he one of the ones pimping ARMs with 30 year fixed rates down at 6% or less!?

It takes a Big Man to admit he's a complete idiot and occupied an office of responsibility as a complete fraud!

Didn't understand what? That completely fabricated loan docs stating 3x-5x actual income and assets based on "honest injun, I swear it's the truth" documentation on 110% CLTV no down, cash back, frenzy-appreciated property was, like, hello, a BAD idea, getting worse when it all got securitized, CDOized, CDO of CDOized, tranched, default swapped, and god only knows what else?? That is might be just a little bit shaky for the economy to bet the farm on an empty paper bag LABELED Beef in big letters?

Somebody send that jar of jelly beans down to CSI for analysis.

New Idea: this statement by Greenspan the first leg in a "Not Guilty by Reason of Stupidity" Plea?

Certainly inflation is contained, they changed the formulae.

Who could have known that in "normal" times, housing and housing related expenditure accounts for up to 20% of the GDP?

Who could have guessed that in these past few "non-normal" years that the housing related expenditure percentage HAD to go up?

Who could have known that adding in the kick from home equity-based purchases would appear as significant economic growth and boost profits?

Who could have known that "innovative financial products" could goose the economy beyond rationality?

But Greenspan knew enough about it to call it "Goldilocks"--not too hot, not too cold, just right!!

Who could have figured out that flat or falling income for 95% of the population would eventually end the housing inflation?

Who could have figured that taking away home equity extraction would impact spending?

Who could have figured that "financial innovation" was more "imagination" than anything else?

Who could have figured that when a slowdown came that "normal" housing related expenditure would fall due to over-supply and over-spending during the go-go years (why couldn't you replace the counter-tops again this year)?

When the slowdown came, why wouldn't you expect a recession of epic proportions?

Add in exogenous factors such as dollar collapse, deficits, lack of savings, increasing energy prices, etc., etc.,

How could you not end up with a terminal depression?

The excuse of this administration, "No-one could have predicted...", suitable for every occaision.

And Homer is Safety Inspector of Sector 7G at the Springfield Nuclear Power Plant

Everyone has their favorite Greenie spin.

Mine was when he argued that mortgage losses were likely to be slight because house prices had risen so much.

By that logic the best way to avoid mortgage losses is to juice up house prices as much as possible through low rates and lax underwriting standards.

Wait, that's exactly what he did!

Did not see it...with those glasses he could see better than the Hubble telescope.

Paraguay is looking better and better huh Mr. Greenspa

I think Greenspan suffered from the "halo" syndrome.

Everyone (virtually) has praised the guy to high heaven for years. Like the star QB, the sainted surgeon or the stunning blonde, at some point it becomes hard for any human being NOT to begin to believe they are really, really, "special".

I think the term "hubris" applies here as well. The reason he didn't see the subprime problem getting out of hand was because, in my opinion, he was probably wallowing in the glory of "engineering" the economy past a market meltdown, a mild recession and an economy smacked by 9/11.

He was at the end, happy to enjoy the praise and looking forward to cashing in a bit. Problems with subprime loans getting loosey goosey? No worry, the underlying assets are "good", historically speaking. Why focus on something so piddling, something so manageble by the markets with securitization in place?

Should Greenspan have seen that lenders, borrowers, ratings agencies and investors would ALL lose it and make incredibly bad choices? Arguably, yes. But that might have required a younger Greenspan, a less adorated Greenspan, who's focus was on his fundamental job.

So we see that Greenspan is human. Falable. What a surprise.

Yep, everything is just fine.

U.S. spends record $283.5 billion in August - MarketWatch

ac,

Sure, but the Fed's THE FED. It needs to function with at least a junior high school education.

Well, it was nothing to look into particularly because we knew there was a number of such practices going on, but it’s very difficult for banking regulators to deal with that

Generally I'm not in favor of public beheadings, but I'll make an exception in Greenspan's case.

http://www.gargaro.com/MaRvInWaVs/angry.wav

BEST OF RICHARD RUSSELL
February 17, 2004
Here is an anecdote from Pierre Rinfret, an economist and seasoned Republican who has known Sir Alan first as a colleague at Columbia, then as a fellow economic consultant on the Street, and as an associate in several presidential administrations.
"One of the absolute lies about him is that he retired from his consulting business a wealthy man. Absolutely and totally untrue. (His emphasis, not mine. Jesse).
When he closed down his economic consulting business to go on the Board of the Federal Reserve he did so because he had no clients left and the business was going under. We even went so far as to try and hire some of his former employees only to find out he had none for the 6 months prior to his closing. When he closed down he did not have a single client left on a retainer basis. His only source of income was his speech making. As a speaker he had to be the ultimate bore exceeded only by Paul McCracken about who Richard Nixon told me on many an occasion "When he talks MEDGO" meaning "my eyes doth glaze over".

Clinton still had some feelings for the underclass

No, Clinton only had some feelings in his underpants.

"Clinton still had some feelings for the underclass"

Skytrekker

Clinton's life is the epitome of a narcissitic, pathological, liar.

Convincing as a liar? No doubt about it. But "caring" about anyone? Ask the Rwandans about how much he cared.
Caring about the "underclass"? Didn't he sign welfare reform that cut off benefits?

I can understand how some could admire Clinton's political skills or some of his "achievements" but to not be able to see through a guy so patently in love with himself.

Clinton could have graciously left office, insured his party's next presidential success, by simply resigning and resting on his "laurels". Instead he dragged his wife, young daughter and the entire country through an impeachment process.

But, no. Bill wanted to stay so he, literally, lined up Democrats like stooges at the White House lawn and had them swear undying fealty to Bubba.

The man didn't care about his party, his country, his wife or daughter. Do you really think he ever gave a rat's ass about the "underclass"?

"what are GW Bush's credentials?
Bringing a new type of 21st century fascism to the USA?"

I guess so but I can never find my size brownshirt on ebay.

Nobody could have predicted this huge f-up! Nobody! Not even the people who did!

Stryker,

I offer no defense of Bush.

The person who needs to "get a life", however, might be the one who cannot recognize the most fabulous liar and phony in American history. Maybe Bush is a liar, phony AND stupid but he's a piker of a liar and a phony in comparison to Bubba.

And I agree that Clinton had the sense to mostly stay out of the way of the economy. But then again, I think his goal was to stay out of the way of most anything that might jeopardize his popularity (the skirts of various women being the exception).

jag, you're an idiot.

Oh Greenspan got it, alright.

In 1999, I used to tell people the inflation was in the stock market. In the uh-ohs, after the market crash, they moved it to housing.

Greenspan got it, used it, and kept the game going a bit longer. Ben will try to do the same, but in slightly modified ways. He will also most likely fail.

American can't continue as it is, so it won't. The only question is how long that takes and how big the fall will be. The longer they attempt o put it off, the worse it will be.

They can let the investors fail now, or let everything fail in a while from now.

Either way, I'm not exactly counting on my retirement money being around unless we get a MAJOR overhaul of this country, its politics, and its mental state.

These are wise men, and have more Financial knowledge than many, Of course they knew////but they also knew that America was in a recession in 2001 and we were very vulnerable..

So with a new president, and no real Economic growth or thought..the round table went for the next and only thing left...your home. Oh and a little Un-Instructured financing.

And look, Our infrastructure is falling apart, no real Economic Growth in the last 6 years, just Debt..No Manufacturing Other than Gm and that is a Ticking Time Bomb waiting to go off off. And now I am seeing more and more Propaganda on Iran...am I missing something here...Where is the demonstrations where is the marching in the streets,...Have we really given up our Rights and our Country...This is my Home Damit.

Time for another Bong hit.