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Greenspan: Worst Financial Crisis EVER, INCLUDING the Great Depression
Greenspan just said that the current credit crunch is "by far the greatest financial crisis, globally, ever" -- including the 1930s Great Depression.
Bloomberg notes:
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the 1930s because “never had short-term credit literally withdrawn.”
Greenspan also said “fiscal affairs are threatening this outlook” for recovery.
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 Balls
Unfortunately, virtually everything the American government has done since the crisis started has been counterproductive. See this, this, this, this, this, this, this, this, this, this and this.
The same is true of most other governments.
In
the understatement of the day, Greenspan also called the recovery
"extremely unbalanced," driven largely by high earners benefiting from
recovering stock markets and large corporations.
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Please, I just hear the same general doom moaning: Too much debt-- we're doomed-- QE--" on and on.
Sorry, it's just too easy and the argument "You'll see I'm right"
is not an argument, it's essentially a threat.
I had a friend who about four years ago KNEW avian flu would cause chaos and end civilization. If not that, there was ALWAYS something that would do that according to this guy. And then doomsday DIDN'T happen, the prediction was forgotten and the next theory was espoused.
I can do arithmetic, I know the money supply is bigger etc, but show some diligence and attempt to QUANTIFY YOUR ARGUMENTS in numbers and time. Real science seeks disconfirming information, so specifically say "x" will happen by "y" so you can show you're right, or be proven wrong. People have been screaming "the end is near" since classical Greece.
If you want to say " Inflation will go crazy," grow a pair and say "By June 20xx, the money supply will be xxxx and the oil price will be xx, imcreasing food prices by xx % , and transport prices for truckers by xx%, so the summer of 20xx it will be impossible to keep food in the supermarkets."
If you CAN'T at least make a numeric argument with signposts, then really all you can say is "I'm worried and I don't like xxxxx"
All this "Everything's gone crazy , it's doom!" without quantified, date bound frameworks is just like the damn Chicken Little story.
You do know in the year 1000, doomsday predictions abounded just like in 2000?
They didn't really need them. Things were bad enough in 1000, hahaa...just like already, people are so concerned with American Idol we really need some serious catastrophe to make things worse...
This is a worse financial crisis because it is an existential crisis facing the very thing that bankers have spent 500 years peddling - debt.
Running an entire monetary regime on debt only works mathematically as long as it can grow. Again, it's very important that everyone understands this.
Our currency is backed by a promise to pay in the future plus interest. Once a deflationary spiral sets in, the math makes the destruction of the money supply via cannibalization from interest servicing needs inevitable.
This is as simple as when someone gets in over their head with credit cards against a level or declining income stream. If the growth of servicing costs exceeds their growth in income, interest begins to capitalize and eventually consumes their entire personal money supply.
There is no way out of this other than devaluation/default.
Peak oil is the end of the growth and debt era.
How this baffoon can find employment again is amazing as he was the route cause of the whole mess.
The new governance in Washington:
"No problem is so big or so complicated that it cannot be run away from".
(Linus)
If Greenspan was Japanese he would have done the decent thing a long time ago.
Simply put the man has no honour or shame.
Greed is good, Greed clarifys a predatory culture that kills its own and fouls its own nest. The people who think Seven Generations ahead rather than profit from HFT will take what's left and let Nature heal the wounds.
we should 'cashier' all the central banks and central bankers first and return the right to print currency to the treasury departments of elected governments in order for people to be able to hold on to their cash! currencies also have to backed by something of value. paper is not exactly the most valuable commodity. Silver is a good bet as it is a store of value and has industrial uses. we can use various percentages of silver in coins to denote fractional value, today's cents or pence. there is no need for crazy expansion of 'money supply'. Silver and for that matter gold eliminate price instability as their supply is relatively inelastic. Then price rises or decreases will reflect the actual dynamics of the market rather than those of manipulation by the bankers, central or otherwise. relatively constant prices will mean the growth has to be real to register like more people becoming prosperous. If wealth becomes concentrated in a few people it will also show up rather quickly and it is very difficult to manipulate that data,. that is if we still live in a relatively free society.
Gold and silver are bad ideas.
Gold is in supply decline; it peaked in 2000.
The only solution now - and will be the eventual outcome here - is currency backed by production. This means Real Bills Doctrine writ large.
Bills could be gold, oil, wheat, anything. We already have markets which fix the relative prices between these things. Banks will serve the purpose to discount these bills.
Either way it won't matter. Until/unless we get fusion solved, we face INEVITABLE sustained global recession. This is what I said 7 years ago when I first began analyzing outcomes from the oil peak.
Right now we are at the moment of choice where we either let our debtmoney strangle our entire economic system or we simply repudiate. There is NO future for economies run on debt. Debt GROWS. It's built into the math of it. That is what interest is. Your obligation grows over time. The real economy, without additional energy inputs, will NOT be growing. So how can it backstop debt which is? Mathematically impossible...
@JR,
After the collapse of the JR Family of Companies I thought you were going to go into cost plus -- you know, "the more you spend the more you get". I followed your comment until the part about the oligarchs. What is really happening is everyone, i.e., those oligarchs you are referring to, is thinking, "holy shit, when it this going to turn?" and you know what, they have no idea. Everyone is holding their breath and waiting for balance sheets to improve and cutting costs and it really is starting to look more like Japan in the 90s, i.e., in denial, and no one thinks that drastic action is politically viable, and they are probably right. The O-man had a shot when he took office to go the hard road and force some pain, but he gambled on avoiding the worst case scenario so its like Martin Wolf said in the FT, extend and pretend and a bigger bubble blows up down the road.
Extend, pretend, loot one more time . . . and a bigger bubble will burst down the road. See How We Are. That is exactly where we are. Obama the Janitorial President, 100% owned by Goldman Sachs. But no different from the Bush presidency in that respect.
wtf? wasn't he the one saying everything was wonderful a few short years ago....these guys are rich...
The world economy blown up already? I thought we were just getting started..
Alan Greenspan has been judged the economist most responsible for causing the Global Financial Crisis. He, and 2nd and 3rd place finishers Milton Friedman and Larry Summers, have won the first–and hopefully last—Dynamite Prize in Economics.
In awarding the Prize, Edward Fullbrook, editor of the Real World Economics Review, noted that “They have been judged to be the three economists most responsible for the Global Financial Crisis. More figuratively, they are the three economists most responsible for blowing up the global economy.”
http://www.debtdeflation.com/blogs/2010/02/23/greenspan-wins-dynamite-prize-in-economics
Greenspan should escape to Paraguay before it is too late. Andrea Mitchell can still send him some checks after she pays her makeup artist.
President Obama had to reach back into the campaign to bring back on board David Plouffe, the campaign manager of Obama for America and Obama-Biden 2008, because the administration’s message is in trouble.
Is it Plouffe who helped push the jobs priority emphasis off the front pages and brought back health care? An accomplished tactician would obviously suggest that this is a bad time for the Obama Administration to be running on a jobs program when unemployment continues to worsen and nothing is working. The summit on health care between the president and the Republicans this week was probably Plouffe’s idea. The idea is to put health care all over the networks and front pages and force something, anything, through the Congress to make it look as if the Dems are accomplishing something, and the Republicans are bad.
Had I been Obama’s adviser, that’s what I would have done
But we need to begin with the truth. And that is that the oligarchs are doing everything they can to turn over all government power into their hands. They’ll use every trick, every lie, all government authority to reward their friends and take care of their supporters--the financial industry, the healthcare industry, the insurance industry, the corporatists, the illegals, the welfare recipients, the minorities, the public service unions—to accomplish that goal.
They need more power to get everything they want. But they now are telegraphing their intentions. In other words, it’s no longer hard to see just who Obama is and who his neoliberal and neocon supporters are and what they want. Fortunately, the American people have gotten their backs up, including a lot of small corporations and small businessmen who stand to get hurt in this. Government can’t do all these things and still reward Finance, PhRMA, the American Hospital Association, the AMA, Unions, Insurers... There just isn’t enough tax money to go around and the tax- and healthcare-payers--paying more and more for less and less--are going to fight.
It now looks as if the Anthem/WellPoint/Blue Cross and Blue Shield Association decision to raise premiums as much as 39% on its California customers was done totally to help Obama tell his healthcare story—otherwise, why do it just when the parent company has made lots of money, i.e., at a difficult time to prove it needed a rate increase?
The Democrats have all these plans, but the word is they’ve telegraphed their intentions, as Econophile and Tyler have so aptly pointed out in every detail. Obama and Co. simply is looking for money in order to finance its schemes for central control and to pay back Goldman Sachs and all those people who hold the debt. You can’t count on both hands the number of things this administration has come up with in the past ten days in terms of trial balloons looking for money—cutting Medicare, revenue streaming for 401(k)s and IRAs while telling you that you are "investing" your money in U.S. Treasury bonds when they are going to use your money “immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds” (as Investors.com put it) and, of course, saving America, i.e., the banks, by Saving With Sheila…
(Reposted from today’s short-lived (technical difficulties?) contributors’ article by Econophile on Obama’s new Healthcare Plan)
Gs , the proxy now raping multiple countries at once. All Hail Blankputz
When the man thinks, this happens:
http://tinyurl.com/5ov6hd
You cannot borrow your way out of debt.
Loans are supposed to be supported by assets.
Lending money to "Frankenbanks" at zero cost, leads to dangerous misallocation and waste of scarce resources.
The nation (perhaps most nations) are being destroyed by stupidity and greed.
If Greenspan had one ounce of honor, he would commit seppuku. I, and I am sure many others, would gladly be his second.
Greenspan, Bernanke and all the other dangerous money-men seem blissfully unaware of the lives and families they have destroyed.
if you are the reserve currency ... yes you can.. devalue the dollar and pay back the debts... then fuck the world a new one and raise the dollar, because you can.
.... well until you can't but we still got bombs
It appears by mere observation that the US cant do that.
If the US could do that, they would have already done it.
Still havent done because they cant.
the banksters are doing great. Too bad the billions of average folks couldn't get the same insider treatment to get near 0% interest on trillion dollar borrowing. And have the usa taxpayer on the hook in case money is lost to over seas bank accounts accidently.
Worst. Thread. Ever. I will only read it three more times. Today.
Greenspan now decides to tell the truth? When will he be behind bars?
Okay, so the people in charge "have no clue."
And yet, anonymous message board posters claim that they themselves have the answers.
So riddle me this: Why are the people in charge, actually in charge in the Fed and country... while those anonymous message board posters, well, are posting anonymously on a message board??
Funny, that....
Who was Publius in the Federalist Papers? Why was W. Mark Felt using the moniker, "Deep Throat"? Shut up with your useless queries and get to work. "If you don't like the news, go out and make some of your own." (Wesley "Scoop" Nisker, K-SAN newscaster in late 60's in SF) You have two ears to listen, two ears to hear, but only one mouth for a reason.
it is funny. especially the way you put it. imo the actual solution involves time travel and none of us (including the "masters of the universe") has a time machine. the mistake (deficit spending during an expansion, leaving little ability to run deficits without currency debasement/higher interest rates in a contraction) was made from, generally, the late sixties until 2007 and with a particular vengeance since 1980. the solutions (as opposed to the critique) generally offered here are, again imo, a hideous combination of politically impossible, economically agonizing and possibly unavoidable, given the wretched box we have been put in (with our own connivance to varying degrees).
because we are too busy fucking bitches on our piles of gold
have we no straight, sexually active females with piles of gold? one would think so. in the trust business i was told that women had more than half the money (and all the pussy).
It's called a power-structure, you blathering idiot. They're a long time building but, in certain circumstances, they can collapse quickly. See Russia, 1917; Germany, 1933; America, 2012.
Sounds like somebody is feeling a bit bitter and powerless....
uhhhh because big bankers put them there???
Is it a full moon out tonight? Fucking idiots coming out in full force.
Funny, that....
Really scary part is that you realize that the people in charge do not have a clue on how to fix anything and they are just hoping that time will cure all.
Eat, drink, and be merry, for tomorrow we may die.
Tomorrow never comes, but death is certain; get over it. "We look at the present through a rear-view mirror. We march backwards into the future." - Marshall McLuhan,The Medium is the Massage, pp. 73-74) 73-74)
An arsonist, admiring his handiwork.
Disgraceful.
if greedscam says that this crisis is the worst ever then i would believe that it is the most mild ever and a prelude to gushing growth.....those greenshoots must be on the verge of becoming rainforests this quarter....
There is no way he would say this before a catastrophic "collapse". Look, it goes either way, but hyperinflation would hide the problems for a year or so. If the doelar goes down (which it will) then gold goes up, economic professors worldwide will say, "So? Imports will go up." I always ask, "What imports?" You can get them by pointing out energy prices (oil) will have a similar effect.
I say jobs bill happens, hiding the inflation once again with butterflies and unicornsHYPE officially sets in (so it is not just ZHers saying it), and then they have another year to institute their police state.
don't worry when the dollar goes down our exports go up!! (and all we export is the dollar!!) wheee!
we export consumption
True hyperinflation ala Zimbabwe would collapse not only the US economy, but most of the world. $100 loaves of bread will lead to mass panic and riots.
What will happen is extended period of high inflation.
Don't shorthand hyperinflation unless you really mean the end of civil society.
All of you are more financially informed than I.
Yet i have heard for some time how the market should fall, have certainly expected it as did many of you. Yet here we still are awaiting the crash and allowing more time yet to pass. Meanwhile we are being raped by lies , if nothing else. As a society , how long can we avoid looking in the mirror, how long can the sheriff not do his job, the sec, CFTC and others . Do they not shave? How can one sleep well while murdering a country?
Why are so many people (millions) on the East coast going along with this? Surely they must be aware of this as you and I
I would like to NOT be the next Argentina
You know what i remember.. this is a while back.. going back about a year now... the down talking of the economy.. Warren Buffet seeing the economy falling off a cliff only to rattle the nerves of investors.
Ladies and gents, we are being served the prelude to QE and Stimuliti 2.0 here.
Nothing else. Their script is so lame !
Where's the fix? Why are they dragging their feet??
QE bitches!!
I'm not even sure anymore whether it's a script or just a knee-jerk response. Stocks drop, Wall Street howls, Fed prints, Pres and Congress spend. Like a 4 step involuntary reflex that can't be modified until the spine is severed somewhere along the pathway.
There are solutions....
Nobody has the balls to implement them....
............................
Let me simplify this for you....
Let's say I have the money...and I know you screwed up last time....
But this time is it ....after this one....I have no more for you....
And you have two options....
1) You can give the money to the government and let them allocate as politicians see fit....and have nothing to show for it....keeping in mind that politicians and the govt. are small business dependent...thy only get a cut of what small business takes in....
2) You can give it to ten entrepreneurs of your choice...while retaining ownership of the businesses....The only tax in this environment is a 15% consumption tax on tangible items consumed ....no other taxes.... nada...
So tell me ....which one are you going to do....?
.........................
In other words do this for me........
Take two countries....let the A country tax businesses 30% and add stae taxes of 10% and an additional VAT tax of 10%.....Individuals who make over $250,000 pay 50%....anything below pays 25%....
Now let's set up the B country....
There will be only a single 15% consumption tax on tangible items used....no other taxes of any kind....
Now do this for me....
Calculate the size of country A vs B in 10 years....in 20 years....in 50 years....Now calculate the tax take....
The size of the B economy and the size of the tax take from the B economy would be more than 100 times the size of the A economy with the tax take more than 100 times the take from the A economy....
...............................
So what are the world's politicians actually forming at this very moment ? Country A
Now do this for me ....go to WIKI....look up your favorite politician....examine their bio...
What do you see ? Almost none of them have the qualifications to run a magazine stand....
............................
Now tell me this ....
WHY IS THIS HAPPENING ?????
that wasnt simple
but far simpler than the real world. such calculations cannot be made. one can guess that such different tax schemes would lead to different growth rates, point to historical examples that may seem to support same, but calculate -- no. and of course politicians rarely see past the next election much less the next century. but one has to admit that bush and obama certainly pissed away the first few trillion with so little to show for it that it makes you cry, boggles the mind, blows one away (fill in the blank).
If things are so bad, why is a decent house around here ( San Jose ) still $1,000,000? That's what I can't figure out.
Just like Nasdaq after hours, they are waiting for an idiot to put in a "Market" order and lift them.
And that's supposed to be good!?