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Greenspan: "Most Virulent Global Financial Crisis Ever"
Alan Greenspan previously said
that the current credit crunch is "by far the greatest financial crisis,
globally, ever" -- including the 1930s Great Depression.
As
Bloomberg noted:
Greenspan
said that while the economy was in worse shape in the Great
Depression, the recent financial crisis was potentially more harmful
than that in the 1930s because “never had short-term credit literally
withdrawn.”
Today, Greenspan said:
The
evaporation of the supply of such credits on so global a scale within
hours or days of the Lehman failure is, I believe, without historical
precedent ...The bankruptcy of Lehman Brothers in September
2008 precipitated what, in retrospect, is likely to be judged the most
virulent global financial crisis ever.....
Greenspan
is not alone
In February, I noted
that this could be worse than the 1930's, but that the governments of
the world were doing the wrong things
in response to the crisis:
As I pointed
out last May:The following experts have
said that the economic crisis could be worse
than the Great Depression:
- Fed Chairman Ben
Bernanke
- Economics professors Barry
Eichengreen and and Kevin H. O'Rourke (updated here)
- Investment
advisor, risk expert and "Black Swan" author Nassim
Nicholas Taleb
- Former Fed Chairman Paul Volcker
- Nobel
prize winning economist Joseph
Stiglitz
- Economics scholar and former
Federal Reserve Governor Frederic
Mishkin
- Well-known PhD economist Marc
Faber
- Former Goldman Sachs chairman John
Whitehead
- Morgan Stanley’s UK equity strategist Graham
Secker
- Former chief credit
officer at Fannie Mae Edward
J. Pinto
- Billionaire investor George
Sorors
- Senior British minister Ed
BallsUnfortunately, virtually
everything the American government has done since the crisis started has
been counterproductive.... The same is true of most
other governments.
For an explanation of what
governments have done wrong, see this,
this
and this.
Greenspan
also said
that regulators - including the Fed - missed the boat:
The
Fed is among the regulators that “failed to fully comprehend the
underlying size, length and impact”...
“For decades, with little
to no data, most analysts, in my experience, had conjectured a far more
limited tail risk than 2008 exposed,” he said. He said regulators and
“virtually all others” shared a “woeful record” in predicting the
crisis. He said credit-rating agencies proved no better at predicting
the crisis than investors.
Greenspan acknowledged
what Stiglitz, Roubini, Taleb and others have been saying
- that part of the problem is that profits are being privatized while
losses are socialized:
But if capital and
collateral are adequate...losses will be restricted to equity
shareholders who seek abnormal returns .... Taxpayers will not be at
risk. Financial institutions will no longer be capable of privatizing
profit and socializing losses."
And Greenspan again called for a break-up of the too big to fails, like virtually
every other economist and financial expert not currently working
for the Fed or a giant bank (and some that are).
- advertisements -
I am so tired of Greenspan saying he didn't see this coming and there was a flaw in his ideology. Brooksley Born (CFTC) warned everybody of the derivatives problem in the 90s before the LTCM collapse.
Greenspan ridiculed her and said she didn't know what she was talking about (derivatives market at the time 25T-30T) then colluded with Rubin and the banks to get congress to take away her authority and shut down the derivatives regulation legislation she was introducing. The senate at the time didn't even know or understand what a derivative was, this tells you they were bought and not ruling on knowledge but rather were influenced by donations from banks.
Then LTCM collapse happened and they had to recognize the problem, but passed deregulation legislation with the appearance of regulation. The derivatives market is 600 trillion now.
The FBI warned of subprime mortgage fraud as well as many others. To say that they were unaware is nonsense. Then Greenspan keeps interest rates low to increase the activity. Lies and more lies.
Greenspan, Rubin, the senate, and the president are guilty of not only letting this happen, but causing it to happen. Accountability with severe penalties would be a deterrent against this kind of behaviour. Fucking Accountability where is it?
Accountability left the building many , many years ago...
"In retrospect," suggests he thinks it is over. Fool.
like kissinger and rubin, greenspan morphs from author of our woes to revered guiding light - how do they do it?
Double post... I hate it when the NSA and Homeland Insecurity fuck up my Internet connection...
"how do they do it?"
By Oligarchy Ordered, Corporate Owned Media Whore Generated Propaganda...
And a public too clueless to put down their donut and shut off the teevee long enough to figure it out...
Might miss a story about Paris Hilton getting something stuck in her ass or Amy Whinehouse's leaking tit job...
and all they keep throwing are antibiotics
Let me write that headline...
GREENSPAN CAUSED: "Most Virulent Global Financial Crisis Ever"
Ahhhh... that's better... Carry on with your pathetic legacy rehabilitation tour Mr. Andrea Mitchell...
Nice one GW. I enjoy your blog daily...
Fools using right brain logic, continue to believe in a broken system. Look for numerous Hedge Funds to go bust this coming week, big names included, and for more panic. Farmland anyone.
Of course knowing human nature and looking at history - no one ever admits his whole life has been a waste , that he is a danger to society and utterly useless. It doesnt happen . They will keep doing what they know to do even as the destruction unfolds all around them. Until they are forced out.
The entire field of academic economics and finance ia completely and utterly flawed, useless and dangerous. Whatever it is that this field is supposed to do to help economies - it has failed - utterly. There is no need for it. The Fed - would be more useful to society if they learned to knit sweaters - once you can no longer buy made in China sweaters at wallmart for 4.99.
...and the moves are carefully calculated to make what comes next the best ever.
allan greedspan is a self serving piece of crap.....we are living his legacy and he can stuff his bloviated prolixity straight up his ass...and i hope it kills him while he's doing it....
EU to Set Up Fund to Prevent Spread of Greek Crisis (Update2)
By James G. Neuger and Gregory Viscusi
May 8 (Bloomberg) -- European leaders agreed to set up an emergency fund to halt the spread of Greece’s fiscal woes, seeking to prevent a sovereign debt crisis from shattering confidence in the 11-year-old euro.
Jolted into action by the sliding currency and soaring bond yields in Portugal and Spain, leaders of the 16 euro countries said the workings of the financial backstop will be hammered out before the markets open on May 10.
“We will defend the euro, whatever it takes,” European Commission President Jose Barroso told reporters early today after the leaders met in Brussels.
http://tiny.cc/1vjk7
This was posted on May 1st - a week before the crash.
'11,250 / 300 is an area of significant resistance and if this level can’t be breached it should signal the end of the March 2009 bear market rally - the weekly DOW chart shows an expanding wedge indicating a significant move is probable - this remains an overbought bear market rally and the uptrend could falter at any time - the VIX index continues to give bullish warnings which is bearish for equities - long term charts of key equity indexes continue to give bearish warnings and the March 2009 lows will be breached in my opinion - USD Index bullish warnings since 2009 on the weekly and monthly chart have not changed and further USD strength and thus EURO weakness is still expected '
http://www.zerohedge.com/forum/latest-market-outlook-0
http://stockmarket618.wordpress.com
FED JACKASSES (THE MOVIE) Repost:
http://williambanzai7.blogspot.com/2010/03/no-risk-is-not-worth-taking.html
love Greenspan's face
Glad you both liked it. The selection of the right facial expressions requires careful deliberation ;-)
"the right facial expressions requires careful deliberation ;-)"
LOL. I am sure it does...
william, how about the sequel?
US Treasury Jackass(es) The Movie
Again starring "Turbo Tax" Timmay Geithner...
With: Robert "The Rube" Rubinite, Fat Larry Summers, Hank "Colonel Klink" Paulson and Neel "Down You Bitch" Kashkari....
Now that would be a shopping cart full of idiots if ever there was one...
FED JACKASSES (THE MOVIE)
Still my desktop background and people still bust up laughing
when they see it.
All time classic william. Thanks.
Very hard to predict a crisis when you dont perceive what you know to come up as a crisis.
Greenspan, like many others, know that the good days of mass production are soon out.
Once again, in this regard, the 'crisis' is not a crisis but a gift.
()
"He said regulators and “virtually all others” shared a “woeful record” in predicting the crisis."
Virtually all except those crackpot, gold loving,nut job Austrians. But who wants to listen to anybody that promotes fiscal responsibility and stable banking instead of statist meddling?
Well, pointing fingers is nice. Then what?
Vote all Dims out in Nov, along with the Repubes.
only the chosen are able to successfully get elected and when another does surprise with a win they are soon tucked away in a control file. two thirds of all need to be led by the nose in america. obama is a classic example of a politician breaking all promises and instead of revolt or impeachment there are approval ratings declines.
the only one to beat the bankers was andrew jackson. kennedy tried his best. much worse to come i'm afraid. physical gold and silver.
Greenspan is a carrier of the virus but seems immune to its effects.
Although to be fair Volcker created it in his lab back in 71 and released it into the atmosphere in 1980 when he refused to go back to a gold standard.
:) It is even out of sync
http://www.youtube.com/watch?v=apDV0b7Xp1Q
Anyone for a nice bit of cake & a cup of tea?
Ya think?
The bankruptcy of Lehman Brothers in September 2008 precipitated what, in retrospect, is likely to be judged the most virulent global financial crisis ever....
It didn't precipitate anything, it only brought the underlying problems to the surface for everybody to see. Revisionist history in the making.
just like the repaving/stocking of materials on the I-35 bridge in MN precipitated the bridge collapse. Yeah, if the paving contractor had spread out the materials differently, the collapse may not have happened THAT DAY but the bridge was structurally deficient and just plain heavy traffic would have likely taken it out eventually.
The bridge originally had gusset plates that were too undersized to give necessary factors of safety that engineers know from experience they should shoot for to avoid collapse.
The overall design of the bridge was of a type that has since been rejected in bridge design because despite being an efficient design, the collapse of any one member anywhere would them immediately take down whole bridge in progressive collapse.
A similar bridge design in OH suffered scary buckling during construction activity 12 years earlier and had to have extensive repairs.
MN DOT added weight to the bridge that it was never design for, in the form of widening the deck, and adding structures like additional barriers and lighting.
MN DOT saw signs of distress when inspecting the bridge, including noting a part that is supposed to be slide/roll freely to relieve stresses of the expansion and contraction of the bridge was frozen, and they did not take appropriate action on these findings.
Yeah sure, the paving materials stockpiled while heavy traffic moving on the remaining open lanes precipitated the failure, but the systems to deliver stable bridges failed long before.
The original design was so weak that just a little load beyond its capacity would be a threat. The original design was a house of cards, not redundant. The structure was later permanently loaded with additional weight it was never intended to hold. The consultants hired to evaluate new loading never noticed or checked the flaws in the original design. No one at govt agency ensured someone was responsible for this critical existing conditions review. Warning signs of dangers of a similar structure many years before collapse were ignored. Inspections showing the condition of the structure dangerously deteriorating were ignored, not acted on.
Yeah, the paving stockpiles did it, but the paving contractor is the chump, the systems to protect us failed, and as typical, multiple things had to be done wrong before actual failure occurred, and multiple people and organizations along the way had a chance to face the music, be the wet blanket, raise the alarm and tell everyone they had to close down the bridge for repairs.... but they didn't.
and had it been handled, under emergency powers/legislation, about as the fdic handles the bankruptcy of a regulated bank, the world would have been far different (better). how much the desire of goldman alumni to remove a competitor completely and purist free marketeers to experiment with a little uncontrolled (pre-fed/financial panic type) bankruptcy would be instructive to know. audit/investigate/depose/indict/convict the fed/treasury (treserve).