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Even Greenspan Admits that Moral Hazard and Fraud are the Main Problems

George Washington's picture




 

Washington’s Blog

Even Alan Greenspan is confirming what William Black, James Galbraith, Joseph Stiglitz, George Akerlof and many other economists and financial experts
have been saying for a long time: the economy cannot recover if
fraud is not prosecuted and if the big banks know that government will
bail them out every time they get in trouble.

Specifically, Greenspan said
today in a panel discussion at a Fed conference in Jekyll Island,
Georgia (where the plans to form the Fed were originally hatched):

Banks
operated with less capital because of an assumption they would be
rescued by the government, he said. Lehman Brothers Holdings Inc.
wouldn’t have failed with adequate capital, he said. “Rampant fraud” was
also an issue, he said.

Lack of Trust

 

“Fraud creates
very considerable instability in competitive markets,” Greenspan said.
“If you cannot trust your counterparties, it would not work.”

Greenspan is right.

As leading economist Anna Schwartz, co-author of the leading book on the Great Depression with Milton Friedman, told the Wall Street journal in 2008:

"The
Fed ... has gone about as if the problem is a shortage of liquidity.
That is not the basic problem. The basic problem for the markets is
that [uncertainty] that the balance sheets of financial firms are
credible."

 

So even though the Fed has flooded the credit markets
with cash, spreads haven't budged because banks don't know who is
still solvent and who is not. This uncertainty, says Ms. Schwartz, is
"the basic problem in the credit market. Lending freezes up when
lenders are uncertain that would-be borrowers have the resources to
repay them. So to assume that the whole problem is inadequate liquidity
bypasses the real issue."

 

***

 

Today, the banks have a
problem on the asset side of their ledgers -- "all these exotic
securities that the market does not know how to value."

 

"Why
are they 'toxic'?" Ms. Schwartz asks. "They're toxic because you cannot
sell them, you don't know what they're worth, your balance sheet is not
credible and the whole market freezes up. We don't know whom to lend
to because we don't know who is sound. So if you could get rid of them,
that would be an improvement."

Similarly, Robert Reich wrote in 2008:

The
underlying problem isn't a liquidity problem. As I've noted elsewhere,
the problem is that lenders and investors don't trust they'll get their
money back because no one trusts that the numbers that purport to
value securities are anything but wishful thinking. The trouble, in a
nutshell, is that the financial entrepreneurship of recent years -- the derivatives, credit default swaps, collateralized debt instruments, and so on -- has undermined all notion of true value.

 

Many
of these fancy instruments became popular over recent years precisely
because they circumvented financial regulations, especially rules on
banks' capital adequacy. Big banks created all these off-balance-sheet
vehicles because they allowed the big banks to carry less capital.

Nothing has changed since 2008 ... the problem is still exactly the same.

The
fraud committed by the giant banks - including mortgage fraud,
encouraging appraisal fraud, fraud in representing the soundness of
mortgages packaged together into mortgage backed securities, the rating
of financial instruments, the numerous types of accounting fraud (repo
105s being just one example) - have continued. No big fish have been
prosecuted.

No wonder no one trusts anyone else.

And the government has rewarded the looting by bailing out the bad actors again and again, either directly or through various backdoor schemes. ( And many economic writers believe that quantitative easing itself is just another bailout).

Even Alan Greenspan is calling out fraud and moral hazard. As I noted in April, Greenspan has been a a die-hard neoclassical or "free market" economist:

Alan Greenspan didn't think regulators should even pay any attention to fraud:

He
didn't believe that fraud was something that needed to be enforced or
was something that regulators should worry about, and he assumed she
[Brooksley Born] probably did. And of course she did. I've never met a
financial regulator who didn't feel that fraud was part of their
mission, but that was her introduction to Alan Greenspan."

Indeed, as Born pointed out last year, Greenspan told her:

I don’t think there is any need for a law against fraud.

However, Greenspan started changing his tune somewhat in April, and his remarks today reinforce his apparent change of philosophy (a change which is as dramatic as the recantation
by Judge Richard Posner - one of the leading proponents over the course
of many decades for removing the reach of the law from the economy -
of his anti-regulatory stance).

Admittedly,
talk is cheap, and I'm not sure how much influence former Fed chairs
like Greenspan and Volcker have on Bernanke or other sitting officials.

 

As I asked in April: "Fraud [is] finally being discussed in polite company ... now where are the prosecutions?"

 

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Tue, 11/09/2010 - 22:08 | 714667 honestann
honestann's picture

Greenspasm IS moral hazard.

Greenspasm == moral hazard.

What a piece of organic trashware.

Sun, 11/07/2010 - 23:36 | 707527 Frank Owen
Frank Owen's picture

Although I have yet to read it, I would be very curious to hear the reactions of Marla, the Durdens and the rest of the ZH staff to Posner's about-face on free-market capitalism. Posner's quote from GW's link on HP:

"If you're worried that lions are eating too many zebras, you don't say to the lions, 'You're eating too many zebras.' You have to build a fence around the lions. They're not going to build it."
- Judge Richard A. Posner

 

Tyler, I think your homeostatic free market is a pipe-dream, or more to the point a system most beneficial to those in the know or a continuation of the haves maintaining their wealth.

This is my biggest beef with the ZH Collective, and I am sure it originates from our vastly different point of view, and also the fact that most of you have been taught - whereas I am still learning and have always been one to question "facts", so I do not accept the same premises or givens as most.   

Mon, 11/08/2010 - 11:21 | 708031 Mediocritas
Mediocritas's picture

Good. Keep thinking for yourself and questioning everything because a lot of what goes around here as "common sense" is just bullshit.

Mon, 11/08/2010 - 08:30 | 707489 iconoclast63
iconoclast63's picture

Sometimes the comments here frustrate the piss out of me. Talking about the details of the current debacle and calling for regulatory reform or prosecutions of the guitly are such a complete and utter waste of time I am dumbfounded.

The moment the Federal Reserve/fractional banking model became institutionalized this outcome was foretold.

When all money is DEBT then universal insolvency is FUCKING GUARANTEED!

Pointing fingers is nothing but a DISTRACTION!!

Furthermore, it is still possible that Greenspan purposely crashed the system in keeping with his earlier writings.

Until we stop allowing banks to print money we can't expect anything to ever be fixed. Period.

Tue, 11/09/2010 - 22:27 | 714711 honestann
honestann's picture

You are completely correct, and history gives as many examples as anyone could ask for.

However, that is no reason to not prosecute fraud!  Until we find a way to kill the beast, we should punish predators - both to supply restitution to victims and to dissuade predatory behavior to some degree.

Sun, 11/07/2010 - 22:55 | 707460 fromthedeepersouth
fromthedeepersouth's picture

Greenspan is delusional...he was then and he is now.  to say legislation against fraud is unnecessary is fine as long as when business' over reach they are allowed to fail, taking their failed business models with them.  But when the TBTF failed, even big ole Al said we can't afford to let them fail....so which will it be Al?  We can't have both, either we allow the free market system destroy everything that is out of balance including the TBTF, or we regulated the hell out of them to make sure they don't parasitize the economy.  Right now, we have NEITHER, which is the WORST of all possiblities....

Tue, 11/09/2010 - 22:32 | 714722 honestann
honestann's picture

When anyone sells a product, they must state everything relevant about that product, including every limitation.  Failure to fully reveal that information is fraud.

The problem today is the massively corrupt and absurd notion sometimes expressed by the phrase, "let the buyer beware".  This idea is cover for predatory criminals - period.

99.999% of all legitimate laws, acts, statutes and regulations can be eliminated if only fraud is punished.  It blatantly isn't.

Sun, 11/07/2010 - 23:24 | 707444 Pike Bishop
Pike Bishop's picture

Fuck Greenspan and the Groupthink clusterfuck he rode in on.

The two most viable objective causes for the Disaster Without End were "bad incentives" or "bad models".

If it was "bad incentivation" why aren't the people involved with the fraud, and the people who encouraged the fraud and ignored the real risks, all getting boned in the showerrooms of Federal penitentiaries?

If it was "bad models" why the fuck are we operating on the same belief systems which have consistently punctuated the past 30 years with financial shitstorms, in ever-growing proportions. This while the run-on sentence has been quality of life funded only by imagination and/or debt.

This academic experiment is over. The purveyors of the "Magic Financial Guy and His Magic Financial Markets" bullshit have not heeded the warnings of their own models. The S&Ls were shit. LTCM was a massive dump by the math douches on which much of this financial enema has found its means and opportunity. Then we farted the most massive debt/asset bubble in history, followed by the much deserved largest high-colonic ever administered to an economy.

Their models only work on paper in the Men's room at the Univ of Chicago. They don't work in the real world of men. Mainly because their business model and analysis models cannot see systemic risk. They have consistently been totally blind to tortured and distorted Gaussian curves, fat tails, and biblically bulbous market tidal waves.

I'm assuming, to this day, Greenspan contends there was no monetary bubble in the housing market. Stone cold blind. And the Fed's best reaction has been to cure malaria with injections of the same.

By now, if one can't see this contrived version of "free market", "market will fix everything" belief system is a pump the supply side, oligarchical excuse to stuff their pockets, one might not be keepin' up with current events.

The only innovation which has occurred is the size and pretext of the rescue to fix the destruction. And "trickle" obviously doesn't exist in all conditions, because the banks, large corporations, and wealthy might collapse under the weight of QEI + QEII. (I got nothin' against wealthy or successful people moving up the ladder. It's the cornholers who convert it to power and try to pull the ladder up behind them, who can just blow me.) 

By sending people with the same belief system as the perpetrators of a disaster, you perpetuate the conditions of the disaster. It is also highly likely they will leverage the moving parts of the current disaster, with that same belief system, in preparation for their next disaster.

If you think they should be free to do as they please, ala Greenspan, and that some mystical market will be judge and jury, you had better hope the market gets to them before they take down the ship with all hands. To date, I have seen no theoretical guarantee of that. In practice, the market has been persistently late in arriving.

If you replace your justice system, with a mystical market, you also are going to get fraud. In fact, it encourages it, and will reward it, right up to the minute it runs out of time and reality.

In this case, we put the financial system ahead of our system of justice. The credit markets and their bigass investors had to be saved at all costs. When people who depend on their system of justice to keep them alive and free are forced to watch this, the entire sense of "right and wrong" is scrambled. The fundamental sense becomes ambiguous.

Trust becomes the victim of ambiguity aversion . People do not know how to trust, if they cannot count on an outcome. The longer the seeding condition exists, the longer the feedback loop between distrust and ambiguity. The longer anger and intolerance grow as the currency of exchange.

Until we grow the fuck up, and realize that in the real world of men, markets and financial systems are here to serve men, not to rule them... we will perpetuate the current assholes in charge of our markets, our financial system and our government.

For a starter, a good idea would be to bring the rule of law for accountability upon these bass turds. To do so, would bring their belief system to a final judgement.

Then we can also put it down, and deprive them of the means which has been provided for us to act against ourselves for 30 years.

We need a financial system for what it does, but we don't need these cockersuckers and their version of it.

If we start taking care of these fuckers in the light of day, with fair trials, followed by first class hangings if necessary, we have a shot at getting our political system and government back.

All we'll have to say is...

"We found lip prints and your DNA on their dicks. You're next."

I'm too old for this shit, and don't intend on spending my remaining time with these morally, ideologically, and financially bankrupt assholes in charge.

Our academic research is complete. 300 MM subject sample. 30 years.

The voodoo belief system had a high positive correlation with the incidence of a shitty outcome for the subject sample. Validity and reliability were high. With statistical significance well beyond an .005% test.

A bunch of big shots need to go to jail.

Nothing will be right 'till these these guys are taking long, hot showers to the wee hours of the morning with MadDog and his crew.

 

 

Sun, 11/07/2010 - 23:51 | 707558 blindman
blindman's picture

p,

 a thoroughly enjoyable rant and i thank you for taking

the time to share it.

Sun, 11/07/2010 - 22:15 | 707387 caconhma
caconhma's picture

Only "chosen" mind can assume that it is possible to do any business in a lawless society. Such society is only capable of producing fraud, civil unrest, and endless wars. Early or later but a lawless society collapses. This is exactly where we are heading.

And finally, no new war will save America. America, using US$ as a reserve currency, has abused the entire world. It became an international financial and military outlaw threatening the rest of world.

So everybody, relax and enjoy the ride.

Sun, 11/07/2010 - 21:43 | 707330 wompus_the_3rd
wompus_the_3rd's picture

All this talk is just that...nothing more.  There is nobody in any position of power

who has the intestinal fortitude to do shit about it.

Its all going to end in tears...as bitter bob used to say.

Sun, 11/07/2010 - 21:28 | 707299 gwar5
gwar5's picture

Greenspan is acting sanctimonious now? There is nothing these people will not do or say.

Sun, 11/07/2010 - 20:48 | 707265 Whats that smell
Whats that smell's picture

Well yea Fraud is not a problem if the banks are allowed to feel their stupid actions. If they were allowed to fall- No Gov't intervention or bailouts. That is how it should work. The bad debt should be eaten by whoever lent it without looking to see if the borrower was able to pay it back.

How about this latest Bernanke deal, it seems everyone with two brain cells is calling this a huge mistake. Hyperinflation looks much closer now.

Sun, 11/07/2010 - 20:42 | 707262 seadragonconquerer
seadragonconquerer's picture

Actually, I think top-level fraud and "moral hazard" are only half the story. The upper half. Look at the substrate: three decades of wide-open borders immigration, sweatshopping the working class and destroying its real purchasing power + three decades of "free trade" deals that outsourced tens of millions of middle class jobs and and destroyed  real MC purchasing power as well. All this lost wealth then covered up with trillions in credit issuance, then layer upon layer of bankster speculation on same. At this point, Zero, chopper B., Geithner have no real choice but to pile on more and more funnymoney, if they hope to postpone the ultimate Crash until someone else's watch.  

Sun, 11/07/2010 - 20:29 | 707247 Mr. Regression
Mr. Regression's picture

Some would call me stupid but I won't own stocks or do business with the banking system until I have some indication that laws and regs will be enforced.

There are credit unions that are happy to have my business and that are honest to the best of my knowledge.

 

 

 

Sun, 11/07/2010 - 20:19 | 707238 Pike Bishop
Pike Bishop's picture

Fuck Greenspan and the Groupthink clusterfuck he rode in on.

The two most viable objective causes for the Disaster Without End were "bad incentives" or "bad models".

If it was "bad incentivation" why aren't the people involved with the fraud, and the people who encouraged the fraud and ignored the real risks, all getting boned in the showerrooms of Federal penitentiaries?

If it was "bad models" why the fuck are we operating on the same belief systems which have consistently turned the past 30 years to financial shit, in ever-growing proportions.

This academic experiment is over. The purveyors of the "Magic Financial Guy and His Magic Financial Markets" bullshit have not heeded the warnings of their own models. The S&Ls were shit. LTCM was a massive dump by the math douches on which much of this financial enema is based. Then we farted the most massive asset bubble in history, followed by the much deserved largest high-colonic ever administered to an economy.

Their models only work on paper in the Men's room at the Univ of Chicago. They don't work in the real world of men. Mainly because their business model and analysis models cannot see systemic risk. They have consistently been totally blind to tortured and distorted Gaussian curves, fat tails, and biblically bulbous market tidal waves.

I'm assuming, to this day, Greenspan contends there was no bubble in the housing market. Stone cold blind.

By now, if one can't see the contrived "free market", "market will fix everything" belief system is a pump the supply side, oligarchical excuse to stuff their pockets, you're not keepin' up with current events.

This is not an indictment of the ideology, only that its pure form easily goes to part illusion, part delusion, when attempted to be practiced by men.

The only innovation which has occurred is the size of the rescue to fix the destruction.

Sun, 11/07/2010 - 20:19 | 707237 Nevermind
Nevermind's picture

If we prosecuted ALL the malevolents...we'd have jobs for years just building prisons.

Did Bernanke perjure himself before Congress with the "the Fed will not monetize the debt comments?

Sun, 11/07/2010 - 22:38 | 707429 Nikki
Nikki's picture

Yes, obviously he commited perjury. However, since he has never been charged or convicted of same, as a matter of legal fact, as of now, he did not commit perjury.

These guys are so good, they could murder someone on live tv, perhaps a popular Texas congressman during a Dallas parade, and get away with it.... Oh wait,... That shits been done before...

Sun, 11/07/2010 - 19:24 | 707169 Everybodys All ...
Everybodys All American's picture

It is long over due to call for Bernanke and Geithner to step down. There should be a ground swell knowing what atrocities these two have been committing against the American tax paying public.

Sun, 11/07/2010 - 19:23 | 707168 fallst
fallst's picture

Atlas My Ass

Sun, 11/07/2010 - 19:22 | 707166 beanieville
beanieville's picture

You folks never believed a word Greenspan said, why would you believe him now?

Sun, 11/07/2010 - 18:57 | 707143 Careless Whisper
Careless Whisper's picture

at a Fed conference in Jekyll Island, Georgia (where the plans to form the Fed were originally hatched):

correction: (where the conspiracy to form a financial coup d'etat was originally hatched)

Sun, 11/07/2010 - 18:51 | 707136 Fraud-Esq
Fraud-Esq's picture

The ONLY problem with Greenspan admitting this is.....it offers him some cover for his systems analysis, right? If you take out the "bad actors", the oligarch system is perfect, including SCALE. 

We can't fall in love with Greenspans shift in tone. It's a trap! 

The people, the ideology AND the system of credit are tainted, not just the people. 

Sun, 11/07/2010 - 18:39 | 707124 masterinchancery
masterinchancery's picture

Systemic fraud cannot exist without a corrupt government and its apparatchiks creating the opportunities and then rationalizing and approving the results. There have always been State laws against fraud in its various forms; the Congress, SEC, and S.Ct. have preempted those laws on the theory of uniformity and the Feds knowing better.

Sun, 11/07/2010 - 18:34 | 707119 Miles Kendig
Miles Kendig's picture

Jekyll Island is still Brunswick

Sun, 11/07/2010 - 18:53 | 707138 Fraud-Esq
Fraud-Esq's picture

true enuf.

not even the bankers can avoid the dioxin on that island!

Sun, 11/07/2010 - 18:19 | 707094 anony
anony's picture

PLEASE, mr. Washington, will you just let that relic fade into infamy?

 

Who the hell gives one good shit what he thinks about anything, fer christ's sake!

Sun, 11/07/2010 - 18:08 | 707077 blindman
blindman's picture

"true value".  no such thing in a virtual, conceptual, market environment.

people are frozen to death so some millionaire somewhere can make

"profit" on a spread.  i hope they enjoy their ski vacation to aspen.

no trust because every time some one deposited their trust with them

they were ultimately taken to the cleaners, laundered.   what is the true value

of a privately run ponzi as a basis for a sovereign currency.  and we look to

these people for insight.   wow.  they should be relieved of their status

and position and separated from access to their "money".

end the fed.

Sun, 11/07/2010 - 18:03 | 707070 Eternal Student
Eternal Student's picture

What's missing here is Greenspan's attempt to excuse this by his statement that "You can't legislate greed". While you can't legislate emotions, you can legislate the results of such (like fraud). Of course, that only works if you prosecute it as well. I haven't heard him calling for the prosecution of the key culprits, namely his buddies.

Personally, I find these quotes rediculous, because Greeenspan and Rubin are two of the biggest culprits in this whole scheme to loot the American Treasury.

Sun, 11/07/2010 - 21:25 | 707296 gwar5
gwar5's picture

Greenspan, Rubin, Summers, and Geithner were all there at the 1998 LTCM meltdown. 

Greenspan is quoted as saying "some fraud is acceptable" to Brooksley Borne, CFTC head at the time.

She wanted to investigate, they stopped her cold, and ran her out by using congress.

8 weeks later LTCM inploded to the tune of $1Trillion.

2007 she got a medal as a token. Robert Rubin is now the co-chair of the CFR.

 

 

Sun, 11/07/2010 - 20:31 | 707250 seadragonconquerer
seadragonconquerer's picture

Will you stop with the Jewish names, already? What are you, an "anti-semite"?

Sun, 11/07/2010 - 17:43 | 707050 edwardo1
edwardo1's picture

The problem goes beyond the issues brought up by the luminous group.  The prosecution of crimes and putting the U.S. capital markets on a legal footing is essential, but the problem is that we can not support our way of life with the present system-even corrected-in place.

Mon, 11/08/2010 - 00:46 | 707605 hbjork1
hbjork1's picture

 edwardi1

" the problem is that we can not support our way of life with the present system-even corrected-in place."

True, but the system we can support isn't that bad if the general public can recalibrate their expectations.

 

Sun, 11/07/2010 - 17:35 | 707044 blindman
blindman's picture

http://www.zerohedge.com/article/how-ben-bernanke-sentenced-poorest-20-population-cold-hungry-winter?page=2#comment-706983

.

by honestann
on Sat, 11/06/2010 - 18:08
#705618

 

That is an exceedingly narrow perspective that ignores the endless intentional scams established by BarneyFrank, ChrisDodd, congress, administration, FannyMae, FreddieMac, Ameriquest, Countrywide and endless other self-serving con artists egged on by the FederalReserve and its continuous treasons.

The "reality" they established gave astronomical incentives to "play their game".  The fact is, those of us who did not play their game were greatly disadvantaged for decades, then astronomically disadvantaged for a few years during the bubble.

By fiddling the housing market, the government of the USSA and the FederalReserve criminals have raised the total cost of home ownership a factor of 8x to 12x.  That may sound extreme, but that is a fact I and others have discovered and confirmed as correct.  What this means is, americans should be able to live frugally their first few years out of school, then buy a home with cash - and never have debt.  How good would the economy be if almost everyone had their entire paycheck to enjoy a good life, with no mortgage to pay?

In your view, people should suck-it-up and just accept being enslaved and never own a home.  Well, that has been my solution.  But I don't require everyone live my way, and I do not ignore or justify overt, massive fraud and artifically created debt-enslavement of, by and for the international ganster bankster cartel and predators-that-be in the government of the USSA.

Those bank loans were secured by the property.  It is perfectly legal and moral to return the keys and walk away from secured debt, just like is common in commercial real-estate... especially when the scumbags who lent you the fictional "money" never produced a damn thing their entire lives, and created that fictional "money" out of thin air.

Individuals did not "destroy an honorable system".  That is the most absurd statement I've read this week!  You ignore 99% of the facts of the matter, a few of which I mention above.

Sun, 11/07/2010 - 21:34 | 707312 FreedomGuy
FreedomGuy's picture

I have joined you. I have no intention of every buying until retirement and only if I am reasonably sure I can "own" it and not get taxed out.

Having said that I always felt that the home mortgage deduction artificially raised the price of the house. It was a no win. Without it, homes would be much cheaper and taxes would actually be lower. A home also subjects you to very high levels of taxation, particularly if you've ever owned a home in the NE.

I am a hard core free market guy and all this manipulation from taxes to financing and backing crap not to mention easy fake money has and always will end badly. One day I hope as people, we will learn to trust ourselves and that free economies will always rebalance themselves. I'd like to try freedom, let people and markets find their equilibrium and then liberally prosecute fraud when we find it...right down to jail and taking (back) stuff from the fraudsters. Just an idea.

Mon, 11/08/2010 - 00:39 | 707599 hbjork1
hbjork1's picture

FreedomGuy,

After WWII, preceded by the depression era, the thousands of returning vets were getting married and looking for housing.  Rental rates and occasional "gouging" was a stimulus for a program that would encourage individual home ownership. 

But, in that era, there were no megabanks as exist today.  The bank was the entity that had to deal with failed mortgages.  You HAD to have 20% down.  They checked your references if they did not already know you, a title search was part of the loan cost and the title had to be insured by a company that specalized in that kind of insurance. 

If there was a forclosure, your 20% was security that could be forfited.  With Glass Steagle in place the system worked reasonably well.  

Expectations are much higher today.  Much of the population seems to be operating on a basis of getting what I want instead of getting what I need. 

The politicians have to please the public or be removed from their job at the next election.  If they want to survive for the next 4 years, they must get funding to run their campaign and have done someting to make people want to keep them. The actions that created the situation we are in now made a lot of people happy - for a few years. 

 

Wed, 11/10/2010 - 02:40 | 715071 honestann
honestann's picture

Yes, it made weak-minded irresponsible fools happy for a while, and permanently screwed all honest, ethical, rational, productive folks forever.

Sun, 11/07/2010 - 17:35 | 707028 Everyman
Everyman's picture

That picture needs a caption:

 

"Yo quiro, QE2!"

Sun, 11/07/2010 - 17:23 | 707025 Akrunner907
Akrunner907's picture

Greenspan should know, he wrote the playbook!!!

Sun, 11/07/2010 - 17:33 | 707040 knukles
knukles's picture

Exactamundo! 
His book is an autobiography; not a distant, cursory, academic study.

Sun, 11/07/2010 - 19:06 | 707150 beanieville
beanieville's picture

You might as well prosecute 10-20% of the population, including the jonny come latelys who bought homes they couldn't afford, lied on their applications, and walk out of foreclosure.

Sun, 11/07/2010 - 21:26 | 707297 FreedomGuy
FreedomGuy's picture

Your comments are well placed. I had a friend who had to get out of the mortgage business because he couldn't stand it. There was systemic fraud from bottom to top. Everyone has a piece of the action.

Having said that, I still put the prime cause at the feet of the U.S. government and puffed up know-nothings like Barney Frank, Chris Dodd and others who protected an agency like Fannie/Freddie where you could unload crap loans. They bought or backed everything and anything in the name of social progress. Banks who traditionally would've kept their own loans would never have done the things we see. They would've been left holding the bag on it.

But, Bean, you are right not to just focus on one end of this.

Sun, 11/07/2010 - 22:20 | 707398 beanieville
beanieville's picture

Precisely.  Since we can't go cut off the scrotums of 10-20% of the population that messed up, everybody gets a bailout, a free pass, a do-over.  If we just go whack the banks, that's not so fair, is it?  All the screaming is coming from those who didn't .mess up.  Ok, maybe send them a cupcake or two since they aren't team players and want to lynch their brothers.

 

Let's let bygones be bygones and move on.  Forgettaboutit -- the scrotal whacking. 

Sun, 11/07/2010 - 16:11 | 706940 williambanzai7
williambanzai7's picture

The fact that

is still being invited to speak at FRB conferences instead of being locked up in the pound for subprime mongrels tells us all that something is still very wrong in Whoville.

Sun, 11/07/2010 - 19:04 | 707148 Sean7k
Sean7k's picture

Have to feel bad for a dog that looks like Greenspan. A face only a mother could love.

+100 WB

Sun, 11/07/2010 - 23:03 | 707474 hbjork1
hbjork1's picture

" A face only a mother could love."

Maybe that is his problem.  If a mother doesn't love a boy child will he become a person that will say or do anything for love?

Goodbuy Alan Greenspan.  We hardly knew yee.

 

 

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