This page has been archived and commenting is disabled.
Guest Post: The Prosecution’s Case Against Alan Greenspan
Submitted by Gonzalo Lira
The Prosecution’s Case Against Alan Greenspan
Should Alan Greenspan, the former Chairman of the Federal Reserve Board (1987–2006), be tried for Crimes Against the Economy, put up against a concrete wall, handed a cigarette, offered a red blindfold, and then executed by firing squad?
Yes—absolutely. No question. (And this coming from an anti-death penalty, anti-abortion Catholic.) Herewith, the case for the prosecution.
There are four main charges against the so-called “Maestro”:
One—Irresponsible Market Liquidity, Which Created Rampant Moral Hazard:
The Accused was instrumental in creating the pernicious policy mentality of “providing markets with necessary liquidity”—essentially, throwing money at every problem.
This first started within days of Greenspan’s assuming the role of American central banker: The frenzy that caused the stock market crash of October 1987 was doused by Greenspan’s pledge to provide “all necessary liquidity, should the need arise”. This instantly soothed the markets as surely as a hit soothes a heroin junkie—within a few months, it was as if the panic had never happened.
After that, and throughout his tenure and that of his successor, Greenspan applied the same remedy, time after time, to every single problem. He became the living embodiment of that old saw: “If all you have is a hammer, every problem looks like a nail”. Or maybe Curtis Mayfield’s famous refrain would be more apropos: “I'm your pusher-man”.
This addiction to market liquidity reached a peak with the Long Term Capital Management (LTCM) fiasco of the Fall of ‘98. LTCM made a series of bad bets that went sour due to the Russian Crisis—therefore, to pay off its losses, LTCM would have to stage a fire-sale to come up with the cash. To avoid this disorderly unwind and subsequent fire-sale—which would have led to an across-the-board run on LTCM’s counterparties, and eventually a wholesale market panic—the Fed under Greenspan organized LTCM’s counterparties, and effectively underwrote the firm’s break-up, providing essentially a bridge loan to finance the whole mess.
Whether LTCM should have been bailed out by the Fed in order to effect an orderly unwind is debatable. Some believe that LTCM had to be bailed out, others believe it should have been allowed to fail, and let the chips fall where they may.
What is not debatable, however, is that, as a direct result of LTCM, two things happened: One, every Wall Street firm realized that, if they were ever hard-up for cash, Easy Al would come through with liquidity—which meant effectively that firms could begin figuring out ways to leverage themselves even more, in the pursuit of profits. They were one and all confident that Uncle Al would bail them out with liquidity, if they ever got into any real trouble.
The other thing that happened was what didn’t happen. Once the bail-out and liquidation of LTCM was carried out, Greenspan failed to learn the obvious lesson from the experience: Sophisticated financial products created under his chairmanship had directly led to the collapse of the firm, and put at risk the entire U.S. financial markets.
If brainiacs like Merton and Scholes, with killer-traders like John Meriwether at the wheel, could drive LTCM off a cliff, what about the hoi polloi of Wall Street, strapping the same financial weapons of mass destruction as Merton, Scholes & Meriwether had been wielding? What kind of trouble could they get themselves into, with all of these fabulous “innovations”?
Did Greenspan put a stop to such suicidally risky practices after LTCM?
In a word: No. Which leads directly to the second charge—
Two—The Fed’s Do-Not-Touch-the Financial-Services-Sector Policy:
The Accused was instrumental in creating a Do-Not-Touch attitude towards the banks, both investment and commercial—which of course led the financial sector to pursue incredibly stupid products and strategies: All in the name of “maintaining financial markets’ ability to innovate”. These “innovations” were directly to blame for the Global Financial Crisis, as they created unsustainable liabilities which sooner or later would lead to system-wide collapse. As what happened.
LTCM was the canary-in-the-coal-mine: What occurred in 2007–‘08, and the virtual freezing of the financial markets on September 18, 2008, was a direct result of the Fed’s failure to regulate the financial markets. It’s what happened when the aforementioned hoi polloi on Wall Street did more or less what Merton, Scholes & Meriwether had done—only magnified.
Not only that, in this urge to “innovate”, Greenspan was key in having the Glass-Steagall Act repealed in 1999. This allowed commercial lenders to act as investment banks.
The timing of this repeal has to be emphasized: This was just over a year after the LTCM fiasco. Effectively, repealing Glass-Steagall meant that commercial banks could build their own LTCM’s right in the comfort of their own back yards. Yet here was Greenspan, egging on the repeal of the Act.
There was a reason why Glass-Steagall existed: Precisely so as to prevent large commercial banks from using their assets to become gigantic LTCM’s.
But Alan Greenspan—knowing full well the history of Glass-Steagall, and ignoring the object lesson of the LTCM debacle of a mere fourteen months earlier—ushered in the era of commercial banks as hedge funds with a smile: Or in other words, he was the midwife of the monsters now known to us all as the Too Big To Fail banks.
All in the name of “financial innovation”. I'm sure Dr. Victor Frankenstein said something similar, back in his day.
Three—Subsidized Money, Which Radically Distorted The Economy:
This is probably the biggest crime Alan Greenspan committed as Federal Reserve Chairman: The so-called “Greenspan Put”.
For the twenty years of his tenure, the Accused—supposedly an avowed free marketeer—subsidized the cost of money. Rather than let the Fed funds rate more or less mirror what banks were lending among themselves, and tighten interest rates when the economy overheated (as his predecessors had done), Greenspan instead goosed the markets: His “targeted” Fed funds rate was forever undercutting what the financial markets were dictating, as to the true price of money.
What happenes when a good—any good, including money—is subsidized? Simple: It creates market distortions. And the higher the subsidy, the greater the distortive effect.
The market distortions Greenspan’s monetary policies created led to one asset bubble after the other—each of which was bound to pop, as they eventually did. Each of which was worse than the last, which they were: Equities, dot-coms, tech, real-estate—they all ballooned, then they all popped. The latest bubble—which I have argued is the Final Bubble—are of course Treasury bonds.
The reason these bubbles popped was that the “market innovations” previously discussed, combined with Greenspan’s guarantee of liquidity, as well as the subsidized money, led to an unprecedented expansion of credit through various non-regulated, over-the-counter products, such as Mortgage Backed Securities and other Collateralized Debt Obligations.
This is why there was such a severe distortion in asset prices in the American economy starting in 1987: Rampant credit creation, a product of the Greenspan Put. It was not supply-and-demand that led assets to accrue value exponentially and seemingly without reason: It was the unregulated, uncontrolled expansion of credit, brought about by the cheap, subsidized money Greenspan was pumping out into the economy.
Furthermore, the Accused was aware of the serial bubbles blistering through the U.S. economy, and in fact warned against these bubbles—and yet did nothing, even though he had the power as Fed Chairman to stop them.
Who can forget that famous line: Irrational exuberance. Nobody can—it’s simply too memorable, too on-the-money. However, everyone seems to forget when Greenspan uttered that famous line: December 5, 1996.
Before all the bubbles—that’s when Greenspan said those famous words. He anticipated the bubbles—yet allowed them to percolate, and then pop.
This regime of subsidized money not only created the various bubbles—dot-com, tech, real-estate—which finally burst in September 2008 with the Global Financial Crisis. This regime has created the condition for the final bubble—the bubble in U.S. Treasury bonds.
The subsidy in money that Greenspan created allowed the U.S. Federal government to go into more debt than it can possibly repay in real terms. It allowed the Federal government to go into much more debt than it would have been able to, if interest rates had been market-dictated. Current U.S. debt pays interest of 25¢ for every dollar borrowed—that interest would have been higher much earlier, had Greenspan not subsidized money. This would have curtailed U.S. Federal government borrowing at a much more manageable level to GDP, instead of the 100% debt-to-GDP ratio it is today, and 110% ratio it will in all likelihood be next year.
This excessive debt level of the U.S. Federal government insures that Treasury bonds will never be repaid in real terms. The market is aware of this situation—the bond market is aware that Treasuries are in a bubble, floating on nothing but air. Therefore, when—not if—the bubble in Treasury bonds finally bursts, there will be a run on comodities, most likely, which will start the hyperinflationary phase of the current Global Depression. From here, the endgame of the U.S. economy.
Unfortunately, the profession and academic discipline of Economics—and all of its current practitioners—are unaware and unprepared for the popping of the final bubble. Which leads to our final charge against the Accused—
Fourth and finally—Turning Economics Into a Religion with the “We Are Right Because Our God—Math—Is On Our Side” Fallacy, and Marginalizing the Heterodox:
Because of the length of his tenure, and because of the prestige that the Federal Reserve has traditionally embodied within the academic discipline of Economics, the Accused created a rigid, inflexible, and supremely arrogant mind-set within the Federal Reserve itself, as well as in the Economics profession as a whole.
Greenspan didn’t accentuate currents of thought within Economics. Rather, he fomented a near-religious approach to math-based macro-economics, while ignoring the human aspect of society and of people. In other words, Greenspan fell for the McNamara Fallacy—and made sure that the rest of the discipline of Economics fell for the same fallacy as well, by dismissing the ideas of the heterodox, and marginalizing them from professional consideration.
Greenspan certainly didn’t invent math-based macro-economics. Math has been part of the game since Adam Smith. (And by the way, don’t let my history and philosophy degrees fool you—I’m a big old math geek. High-end philo eventually turns into math, JSTYK.) But Greenspan certainly made math-based macro reasoning not only de rigueur—he effectively excommunicated anyone who did not share his McNamara Fallacy.
Such a meretricious approach gave priority to quantitative measurements of macro-economic performance, rather than qualitative distinctions among policy options. In other words, “more in numbers is good, better in quality is irrelevant”.
This has led economists and Economics as a discipline—across all schools of thought—to value aggregate levels of whatever metric they were interested in, rather than qualitative differences which are not so easily measured.
On the political Left and Right—especially among the elites, to which Greenspan shamefully catered to—each side has become addicted to measuring the health of the U.S. economy by its aggregate demand levels (on the Left), and by its aggregate asset levels (on the Right).
Yet during the twenty years of Greenspans’s tenure, though both metrics improved drastically, there is no question that the American economy deteriorated. Why?
My brothers and sisters on the non-elite Left complained—bitterly—about how workers in third world countries were being exploited worse than slaves, to make the goods and products which American consumers were herded like cattle into demanding.
Meanwhile, my brothers and sisters on the non-elite Right complained—bitterly—about how American workers were being laid off in massive numbers, entire industries ripped out of the country and outsourced overseas, leaving only fast-food jobs and dead cities, all in the name of “Globalization”.
Both of these complaints are perfectly true and accurate. Both of these complaints stem from the same drive that Greenspan had such an integral part in encouraging: Quantitative improvements in aggregate demand levels and aggregate asset value levels as the only measures of economic “progress”.
These two metrics were considered by the Fed under Greenspan as the only “serious” metrics by which to measure economic performance. And thus it was inculcated among America’s political and business elites as the only measure of an economy’s worth.
But they are most certainly not. Anyone with eyes that see and a mind that works can tell you that a healthy economy is not how much you buy, or how much your stock price rises. A healthy economy is dependent on the worth of the work: The sense that people in the economy have that they are building something worthwhile, and not merely selling something worthless, or providing a meaningless “service”.
But these human measures of worth were dismissed by Greenspan’s calculations. They did not fit his equations, or the equations of all the other economists who wanted to be taken “seriously” by the high-priests of the Federal Reserve.
His famously opaque pronouncements as Chairman also led Economics as a discipline to favor opacity over clarity, obscurantism over elucidation. It wasn’t Greenspan’s fault that his Congessional testimony and various speeches were so famously hermetic; as a central banker, he had to maintain a poker player’s dispassion, so as not to unnecessarily influence the markets. But it was his fault that he seemed to encourage such oracular dictates from the profession itself. Ask any reader of technical Economics papers: They are incomprehensible. And that’s being kind.
Thus his Delphic opacity, combined with the undue reverence for math-based ratiocinations, plus the near-religious dismissal of all criticisms from the “uninitiated heathen” outside the white marble halls of the Fed and academia, led Economics as a profession to completely miss out on the Global Financial Crisis, and the subsequent (and currently under way) Global Depression.
In other words, because of Greenspan, Economics failed to call the biggest crisis in our lifetimes.
Regarding the past three years of crisis: Collectively, economists and Economics have tried to wash their hands of the whole mess, by acting completely surprised while shouting to the rooftops, “Whocouddaknownit?!?” (For my foreign friends and readers: “Who could have known it?!?”, or in other words, “Who could have predicted that this once-in-a-lifetime crisis could have happened?”)
Well, the fact is, a lot of people knew this was going to happen—and they said so. They in fact bet that it would happen. Michael Lewis’ fine new book describes three such people who made fortunes off of these bets. But not only traders, many people outside of Wall Street realized something was rotten in Denmark.
Many housewives realized that there was something wrong—I personally know one, in fact: My mother. She was approached by her bank, and offered (cajoled, wheedled and sweet-talked, actually) into getting a second mortgage on her home: “Rates are so low! And house prices in your area are booming! Go on! Give yourself a treat! Take out a second mortagage and spend-spend-spend!”
To this, my mother asked the obvious question: “But what if house prices fall?” She was answered, “They can’t fall.” And she asked, “Why not?” “Because they can’t.” “Yes, but why not?” Back and forth it went for a while, until the loan officer shook his head, said my mother was “difficult” (I could have told him that), and didn’t call her again. He probably found an easier mark.
But my point is, If a housewife, without any sophisticated training in economics, could figure out the obvious, yet an entire discipline failed . . . then maybe the discipline’s torch-bearer has led them down the wrong path.
Greenspan: It’s Greenspan.
To conclude: The Accused—Alan Greenspan—reneged on his sworn mandate to maintain low inflation and full employment, and instead pursued a policy of maintaining—and increasing—aggregate asset values, whatsoever the cost. In other words, he actively pursued bubble-creation and inflated asset values, to the benefit of the financial services industry, and to the detriment of the U.S. and world economies as a whole.
He furthermore created rampant moral hazard, and declined to carry out his sworn duty to regulate and monitor financial markets, and to curb usurious or unsafe financial products and services. Finally, he created the conditions that—quite possibly—will lead to a Treasury bond collapse and a hyperinflationary catastrophe.
The Prosecution rests.
»
- 16661 reads
- Printer-friendly version
- Send to friend
- advertisements -
Last posting of these for the day. Happy Friday ZHers!
2cool (4skool) <ass-kicking>: http://www.youtube.com/view_play_list?p=12689F04C0CEEF6C
up with the get down <funky fresh>: http://www.youtube.com/view_play_list?p=4217E3682ABFEFB9
Useless
Yes, Greenspan was useless and did incredible damage too.
A Guillotine for him and his ilk.
After a show trial of course!!!!
I don't disagree that the Maestro was instrumental in ruining things. However, I can't help but wonder, everytime I hear his name, if the author of "Gold and Economic Freedom" did it on purpose. Sort of a, "You want this crap system eh? I'll show you what I can do. I'll bring this motherfucker to it's knees!" move.
This guy makes a strong case for exactly that. And he's calling for $600/oz Silver too.
http://www.roadtoroota.com/public/190.cfm
This looks like it should be a worthwhile venture for the weekend. Thank you kindly.
So this is the case for the defence?:
http://www.roadtoroota.com/public/117.cfm
Oh, and he's calling for $6,000/oz silver, not $600. WTF is with that comic? Do all the regional Feds come out with stuff like that?
Johnny D, that is an interesting website, thanks for sharing it with us!
If Greenspan was indeed the Trojan Horse of the FRN system, well it was the wrong approach.
Agreed!
Great post, but he forgot to mention Ravi Batra's most excellent book, Greenspan's Fraud.
http://www.amazon.com/Greenspans-Fraud-Decades-Policies-Undermined/dp/1403968594
Greenspan theme song:
http://www.youtube.com/watch?v=_MXgc8wzfC4
Nice. The last time I heard that song was at a honeymoon luau. Golden moon. Silvery sea. Hmmm...
Nothing will happen to Alan Greenspan. He has been knighted by the Queen and was following orders. He is a loyal servant and will be protected.
Bingo...
My thoughts exactly.
There is an ongoing theme here, eye-opening video.
http://www.youtube.com/watch?v=o2k4dSGOawo
that is some huge hair on ms. lunden.
Here's some Friday night entertainment, good shit !!
http://www.youtube.com/watch?v=FXHUvmPWm-w
Hm...Painful to watch...Ugh!
However, should it come to that, Greenspan will be expected to fall on his sword, else one of the Queen's real knights will be sure to help him. Without a proper bloodline, he's just a prized pet that can be put down if he doesn't behave or bites the hand.
Plus, he's on the board of the B.I.S.
Seems common sense.
The Case for the Defence:
Alan Greenspan: Um, Errr, hmmmmm, urm,...
Nah, he just has to ramble off some Chauncy Gardiner-esque nonsense. It's always worked before for him.
The Defense wishes to utilize the "Bill Cosby Method," your honor...
Greenspan: "Well, you see that we had the fazzle wit da nizzle, and the people wit da housing were all like, 'WOOOOO,' and I said, 'OKAY!!' but then the man with the thing over there came out, so I just gave the child a pudding pop and then I made the face!"
Judge: *head explodes*
+1 HAHAHAHAHAHAAAA!
...not cool man. Bill Cosby is dead.
He's not dead.
lol...i don't know why this is funny but it is.
http://www.youtube.com/watch?v=RYA0DsPcbaU
Not so fast..
China was dumping money into the US like retards, it must have mind fucked him a bit.
Vely solly mista Gleenspanson ...Wei have mole US dorrars dan wei have glains of lice in China!
that's Japanese, douchebag.
So desu, ne.
And my defence is "I was just left to go my own way,everybody thought I knew what I was doing,which I did not,anyway its a bit late to change things now and if you send me to jail no-one will do the job in the future so there "
The case for the defence: "The Devil made me do it"
"Should Alan Greenspan, the former Chairman of the Federal Reserve Board (1987–2006), be tried for Crimes Against the Economy, put up against a concrete wall, handed a cigarette, offered a red blindfold, and then executed by firing squad?"
absolutely....and when the piece of shit has taken a puff on the cigarette, throw it in the bucket of gasoline needed to burn bernanke into a pile of ashes...
george washington for a 3d term, Gonzalo Lira for fed chairman....(leo for court jester)
I could never be Fed chairman—I believe in helping hard-working, honest people, not scum-bag banksters.
GL
And being a self proclaimed catholic, you would squeeze money from the poor and send it to the RC.
...wait a minute! That's what the Fed (and other CB's) do!!
Hahaha, you could occupy the position for the shortest turnaround time ever...your first act could be the unequivocal abolition of such a useless, predatory institution.
Prosecution forgot to mention the Brooksley Born warning and attempt at regulating the derivitives market even before the LTMC meltdown, and Greenspan and the bankers campaign against her. The politicians were against the regulating of derivitives too and they didn't even know what one was. This was in 1998, and the derivitives market was 25-30 trillion it is now 600 trillion.
Too true—however, one could argue that maybe B.B. was wrong.
However, LTCM was too big to ignore—yet Greenspan ignored it.
That's why I damned him over LTCM. But you're right.
GL
I have to go look it up but wasn't LTCM producing 40%+ returns for those who participated.
So that is all we need to know as to why the frak this is protected.
It brings back to mind how a average smoe is just a smoe in the economic world.
Lie Cheat And Steal baby it's what's for lunch$$$$$$.
GL - did you read his book, Age of Turbulance? It's worth reading, if nothing else, a nice economic history story. There are a few pages on that lunch with Born. Basically AG tells her the free market will route out fraud and take care of things. I happen to agree with him on that - the problem was bailing out these firms after they blew up. I would agree AG started that trend with LTCM as you point out. Have a good weekend - great post (again)
"I happen to agree with him on that" - well that didn't work out so well, now did it.
Alan's BS statement of the millennium. Please understand the lesson of the above - greenspan was a menace, and there are lessons to be learned. F his book.
You obviously didn't learn the lesson, or even know what the lesson is.
AG's statement is indeed the truth - only that he not only did not believe in it, he actively SABOTAGED free market.
You ppl who keep blaming free market are fools. We never really had a free market.
The sole purpose of the FED is to MANIPULATE the quantity of money to further an agenda. That agenda is to run a debt ponzi scheme. It is to provide daily bailout of banks that got too greedy via the discount window, etc, so that the ponzi can last as long as possible.
The FED is the last thing we want in a free market.
Learn that lesson.
This not an an argument against regulation. Regulation is necessary to keep a free market functioning. E.g. you need regulation to maintain an equal playing field. No one participant should be able to move the market, much less destroy it.
"The sole purpose of the FED is to MANIPULATE the quantity of money to further an agenda. That agenda is to run a debt ponzi scheme. It is to provide daily bailout of banks that got too greedy via the discount window, etc, so that the ponzi can last as long as possible."
It seems more and more people are awakening to this conclusion.
I would add, that when it manipulates the quantity of money the quality is effected as well.
This is theft of labor.
Hypothetically, if you agree to work for a dollar an hour (labor in exchange for fiat money) but that one dollar buys less & less due to monetary intervention, they have stolen a portion of your labor.
I say stolen because the action had the intent to devalue that dollar. The effort you expended to earn that dollar didn't change (your sweat & time)...it is now, however, miraculously, valued less.
And there are "Feds" scattered across the globe...not just in America. They have different acronyms for their names but they are just as destructive to the medium of exchange in those places as well.
Happy Labor Day to all ;-)
You have just described slavery. We have no choice when they devalue, unless we stop them. Need enough people to get this at the same time to do anything about it.
I've often wondered about the woman who made a bad choice in life and is now stuck trying to raise three kids with these people working against her interests as well.
It's criminal.
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." Thomas Jefferson
SeeYa M.
And there's a punitive treadmill on it as well. 400 dollars is grand larceny. A serious crime when 400 dollars means something. A petty ass crime when it's being devalued at horrendous pace. God (government) is getting harsher and harsher every day.
Gonzalo: love your posts, keep them up. Tyler: Dude, Elliott Wave Financial Forecast JUST REFERENCED YOU in their latest UPDATE, out today...
well, given EWI's absoultely attrocious track record going back to 1984, I'm not sure TD wants to be associated with EWI.
http://www.marketwatch.com/story/elliott-wave-adviser-now-aggressively-bearish-2009-11-25
LTCM
It had off-balance sheet derivative positions with a notional value of approximately $1.25 trillion, most of which were in interest rate derivatives such as interest rate swaps. The fund also invested in other derivatives such as equity options.
I don't think you can argue that she was wrong, since right after that LTCM went down. Then 11 yrs. later we have this huge financial crisis among others that happened along the way. If the argument is that you let these institutions go under rather than regulating derivitives, well this would still cause collateral damage to the economy and the workforce. Perhaps if LTCM was left on its own these other institutions would think twice before they overleverage, on the other hand if they weren't allowed to do it in the first place that would seem the better option. I don't think leaving a 25-30 trillion dollar market (in 1998) unchecked is a good idea because it could grow to a 600 trillion dollar market then it would be too late. Let me add that I agree with your article and enjoyed it, but think an integral part is missing.
I'm on your side. What I AM saying is, BB's concerns could have been dismissed before LTCM went belly-up—but after it went broke, there was no way LTCM could have been ignored.
Yet Greenspan did.
I was giving AG the benefit of the doubt, re. BB. But the guy still screwed the pooch something awful.
GL
EARLY failure is the best regulation. Grotesque entities like LTCM would not be able to come into existence if we force early failure. Think about what the role of the FED is - lender of last resort. The FED is there to hide failures in the financial system, thereby bad behavior is encouraged, and small risks accumulate to systemic levels. The likes of LTCM were only possible because we have decades of distortion.
Of course, once you have companies like LTCM, i.e. the infection is already systemic, you're really left with the choice of bailout, to let the system live another day, or failure, and bring down the whole thing. Why/how did we let ourselves get to the point of aving to make this choice?
The intellectual argument for free market instead of regulation to combat bad behavior is this: regulation is the attempt of centralized control of distributed bad behavior. Even if the regulator is honest, bad behavior always wins.
What you want is to have regulation set up a true free market system, a system that is able to punish bad behavior itself - a self policing system. The market we have today will never be able to police itself. It is set up to be exactly the opposite. The regulator is often the regulated. It is to be easily gamed to profit those with money power. All the regulations are just for show, and maybe to keep the barrier of entry to that special club high.
Great post GL. However, to blame Greenspan only is to forget all the fabled central bankers since 1913. The Presidents and senators bought and paid for. It is to forgive ever traitor that has walked the halls of Washington and New York from Washington to the present. It is to erect a facade over the totality of American and European history starting with the Goldsmiths of the 1400's.
In short, it absolves the people and those amongst us whom are capable of understanding, of having the integrity and resolve to create a social system bereft of government and based solely on free markets and private property.
We whine and complain about the results and do nothing about the process- when it is the process that is killing us; slowly, deliberately and without conscience. It is so much easier to blame a person, group or faceless corporation; when the reality is the solution lies with us. We enable the process through our unwillingness to act. We pay our taxes, we watch our TV, we allow our children to be educated by the state and we refuse to understand what stands before us:
The reality of human action and its' effect on markets. The tyranny of government and the violence of its' every action and law, the transfer of wealth for those willing to sacrifice the labor and wealth of everyone so they can live in luxury just because they are a little smarter or born into a better situation.
Greenspan was bought and paid for, otherwise how do you reconcile the influence of Ayn Rand in his early writings? His statements regarding gold?
Finally, Austrian economists are tired of being grouped with Keynsians, monetarists and neoclassicalists. There are good economists- Mises, Hayek, Rothbard, Bastiat and many others. Economics is not necessarily the problem- it is those who worship at the alter of the Central Bank. They have sold their souls to the devil of Fiat money and leverage. We must make a distinction- and this is made by focusing on the details, not the personalities.
This is the big picture. Once we realize that the FED's agenda is to serve the banking cartel not the U.S. then we will understand their actions. They have no interest in the common man or country other than using them to serve their own interests. Just have to follow the money, look who recieved the majority of the bailout money, and on top of that recieved FASB, 0% interest at the FED, TALF, ect...
Well said.
Great post.
After reading this
http://www.market-ticker.org/akcs-www?post=165919
Why should anyone in power give a stuff what they do, they don't reap ANY consequences of even minor significance unlike you and me who are fined or thrown in jail at the slightest suggestion of naughtiness
communist garbadge... Greenspan is targeted by the mob-banksters.
When the guy come's up with idea's in his BATHTUB,and then ADMIT'S to it.Well.......no wonder we are all underwater
Now I know why he's a fan of bubbles!
Treasury bonds. The final bubble that turns the champagne into regular old grape piss.
Yup. This time it really IS different. All previous bubbles were caused by easy credit distorting asset prices. Now it's the credit itself (money) that is in a bubble.
Imagine moving all your money into bonds after 2008 to then lose 30% of it when the bond market crashes. Game over baby boomers!
I think a 30 percent haircut is a wet dream. Loss would be total. That's the problem with having the reserve currency. The benefits are far greater than a non reserve currency and the downside is far greater as well. As it distorts every other currency on the way down. No help as it's cordoned off in an attempt to contain.
Someone mentioned the new 5.2 ghz IBM mainframe in another thread. The thing is IBM couldn't make 3 of those things without the commercial paper market. You just have to think about how much damage a total flash freeze of money would cause.
That grape piss could be resveratrol....once the FED is set ablaze.
"resveratrol"
What's the latest on resveratrol, anybody know?
You can take too much of it. Better to take grape seed extract.
without question, the "meastro's " name will figure prominently in future history books.
Gonzalo Lira wrote:
"Should Alan Greenspan, the former Chairman of the Federal Reserve Board (1987–2006), be tried for Crimes Against the Economy, put up against a concrete wall, handed a cigarette, offered a red blindfold, and then executed by firing squad?"
"Superior Orders (often known as the Nuremberg Defense or Lawful Orders) is a plea in a court of law that a soldier not be held guilty for actions which were ordered by a superior office.[1] The superior orders plea is similar to the doctrine of respondeat superior in tort law where a superior is held liable for the actions of a subordinate, and the subordinate may escape liability.[2] "
http://en.wikipedia.org/wiki/Nuremberg_Defense
Well, we know how that ended, for most of them.
If the US Fed/Elite Banksters/National-International Corporations/Politicians-Bureaucrats-Legislators/Small-Large Businesses and Consumers are all beholden/subordinate to the Worlds Ruling Elite and if they were on trial for economic crimes against humanity how would the world determine their fate, if indeed, "Superior Orders" were applied? Hm...
http://www.jewishvirtuallibrary.org/jsource/Holocaust/verdicts.html
Nice documentary from Sweden here:
http://www.youtube.com/watch?v=4ECi6WJpbzE
Thanks, fasutian bargain.
"Mephistopheles is known throughout Goethe’s book as a “fallen angel” himself, as he clearly states to Faustus. He rebels against the authority of God and is thrown out of heaven into hell. In a passage from Marlowe’s Faustus, Mephistopheles says...
“Why this is hell, nor am I out of it./ Think’st thou that I, who saw the face of God,/And tasted the eternal joys of heaven,/ Am not tormented with ten thousand hells/ In being deprived of everlasting bliss?”
Any resemblance to persons living or dead is purely coincidental.
Good stuff. Heaven and hell, it's all right where you are.
Jamie Dimon's house for sale in Chicago, price dropped by $2.6 million.
http://noir.bloomberg.com/apps/news?pid=20601108&sid=aggynP4M4Z_Q
Complete photos of the house here:
http://coldwellbankerresidentialbrokerage.91201304.900618.idx.coldwellbanker.com/propertysearch/propertydetail.aspx?LID=23564479
At the local Borders, Dimon's autohagiography (or whatever the hell it was) was face up on a table right next to "The Greatest Trade Ever". I stuck a whole bunch of bookmarks into the page where John Paulson meets Dimon at a cocktail party and explains his rationale for the housing market crashing, whereupon Dimon just stares at him in uncomprehending stupor for a minute before wandering off for another drink, never to return.
Guy is a complete a-hole and should be strung up. I'll read his book as soon as I finish Hank Paulson's revisionist history on the bailouts and why he was such a cool guy. Another a-hole. Come to think of it, I wouldn't waste my money, time or brainpower on anything these crooks write.
Yeah, I'll buy it. I need some place to keep my dogs.
I'm reporting you to the SPCA. How dare you degrade your dogs by letting them sleep where this guy slept. What were you thinking?
Gonzalo, another great piece, bien hecho!
But, I place AT LEAST EQUAL blame on the Congress and the past two Presidents for SPENDING SO MUCH MONEY. The spending, in my view, is both the cause of banksterism run amok.
Yes, Greenspan and the banksters are guilty of a lot. But, the root cause is the spending that WE allowed by electing these miserable politicians.
There is plenty of blame to go around, but yes, any voting citizen who was more than happy to receive the proverbial free lunch without asking any questions, or wondering when the bill would come due, should look in the mirror as well.
Last I saw Greedspan, he looked like his days left are few. Need a scapegoat? Blame it on Al.
yeah, death knocked on his door and then went away figuring it got there a little too late.
Yeah, this article is another variant on the "It's Bush's fault" excuse. "It's Greenspan's fault." Actually, it's a great excuse for not doing anything in the present. The attention is focused elsewhere - anywhere but on the tough decisions. I'd agree that Greenspan was the author of moral hazard, but what good does that do us now? We need to get the current chairman to stop his infinite loop of print-spend-repeat. This is a hell of an emergency!
Save the Nuremburg trials till after we win the war.
Amazing. Right in the middle of a damning indictment of Greenspan, and consequently the whole of the Fed apparatus, appeal to the same faith: the Fed must regulate the banks, what businesses must be coercively separated, which innovations are real and which are "innovations" that are hurtful.
How many regulator failures will it take before anyone can see that regulation is part of th problem, not the solution??
Regulation does to businesses model what trillions in zero-interest liquidity does to markets.
I don't think no regulation is the answer, but we have too much worthless regulation and good regulation that isn't enforced because of corrupt government agencies and politicians. SEC recieved a dossier (on two seperate occasions ) prepared by Markopolos on Bernie Madoff and both were ignored. Many examples of the SEC and other agencies ignoring the obvious corruption, and there is only one explanation which is they are complicit in the corruption.
+10
http://en.wikipedia.org/wiki/Regulatory_capture
I think execution is a little harsh. Lets just make him pay it back...all the damage he wrought. Figure him working on the chain gang until he dropped dead or payed off the trillions would be far more humorous and a bigger disincentive for others to loot...I'm looking at you Zimbabwe Ben!
No, execution is not harsh enough—therefore, I have come up with an EVEN BETTER PUNISHMENT for "Easy Al":
He should be exiled forever from all Georgetown and northern Virginia salons and cocktail parties, and forced to move to Mississippi—to house arrest in a community college, whichever of the CC's down there that have the dumbest, most inbred students.
Then, Greenspan should be forced to listen as his double-digit IQ student read—aloud—every word of Ayn Rand's atrocious books. And then listen as his students "discuss" Ayn Rand.
Now THAT would be a punishment! Talk about cruel and unusual!
GL
Most inbred students? You're talking University of Chicago or Harvard Business school?
I think he should be stripped of all his money and not given a printer and forced to learn what broke means.
I have a great punishment for all bankers; make them work for a living! How?
1. Turn the government upside down by completely reversing federalism and vesting authority at the individual level. How?
A. Federal government is replaced with a small congress of fifty representatives, one from each state with a single elected member for emergency decisions. They have the power to do two things: organize and direct the defense of the country if attacked and to decide judicial opinions in disagreements between the states.
B. States are limited to the same restraints with adjudication to involve local community issues only and th organization of a state militia.
C. Local community governments of 25,000 maximum in perfectly square districts (geographically) run by boards of supervisors.
D. Individual citizens have the power vote on every decision through referendum.
2. All services are to be provided by a free market .
3. Total protection of private property.
4. All taxes must be approved by referendum.
5. No permanent bureaucracies allowed.
6. All money must be 100% asset backed (with real assets- gold would work) and banking would be private.
7. Individuals would be responsible for their actions- good and bad.
This is a simple list, but it is the existence of government that is the problem. To the extent we can eliminate it, the better off we will be.
Wouldn't that be sweet?
Who defines the property rights? How about patents, trademarks, and all those other useful legal aids that foster innovation?
This won't last long with the best competitors being more able to influence each of these senators and elected officials where you get exactly where we are right now.
Government begets government, is populated by those who desire power, and power demands more of it's own.
Our best bet is to let it burn itself down...
Private property refers to your person, your possessions and land or ideas that has been improved by you alone.
Patents and trademarks do not foster innovation, they merely provide protection while an idea is produced. In fact, too much patent protection actually stifles innovation. Further, it requires a bureaucracy and police power to enforce it.
Governments do not have to beget governments. Investing power in individuals is the greatest curb on tyranny by others.
Burn itself down? That is anarchy without purpose and all anarchy should have purpose.
"He should be exiled forever from all Georgetown and northern Virginia salons and cocktail parties, and forced to move to Mississippi—to house arrest in a community college, whichever of the CC's down there that have the dumbest, most inbred students. "
You lost a little respect from me with that statement. A little immature and ignorant wouldn't you say?
Aww, why you pickin' on ol' Ayn'y? The powerful have been twisting words to justify crimes for a while now.
You're not gonzalo lira. Unless you're gonzalo lira on crack...
Thank You, Shameful!
This is the best idea I've ever read on Zero Hedge: Greenspan facing iustice.
Funny how, even though all the legal machinery in the US is there, there are no prosecutions for high level financial offenders. Not even investigations.
reminds me of something I read:
"all the forms of law remain, while all iustice is gone."
--The Dosadi Experiment
How does a society maintain itself without examining fraud, systematic failure & crimes against the Treasury? In the short-term, criminals can buy political cover (I'm looking at you Obama & Holder) & avoid culpability.
But in the longer term, how does a society subsist, where there is no responsibility taken or delivered?
I fear America has gone too far believing its own PR. Perhaps a few uncorruptible States' Attorneys General can come up with something. A few indictments under state criminal law, pursue where they go. Start the ball rolling.
http://www.zerohedge.com/article/texas-ag-candidate-sues-goldman-et-al-c...
Thanks Michael! Let's see where this goes...
lest we forget he chaired the "bipartisan" National Commission on Social Security Reform where they just decided to raise taxes. This was before he was fed chair. true colors exposed.
new video from peter schiff on the meltdown...
http://www.youtube.com/watch?v=4ECi6WJpbzE
nice
Just saw it based on your rec. Agree.
A parent leaves the house for a very nice weekend vacation and leaves the Teenagers home. The teenagers have a party and tear up the house and burn part of it down.
Who's fault is it? The parents or the kids?
http://en.wiktionary.org/wiki/spare_the_rod_and_spoil_the_child
The insurance company's
Unfortunately a lit cigarrette isn't hot enough to ignite gasoline...Unless you're in Hollywood.
You don't understand gasoline. If it's in a combustible mixture it'll burn. 12.5 to 14.5 parts air to one par vaporied gasoline. Pour gasoline on a snowy 20 below zero road throw a cigarette in it, it'll go out. Pour it on a 120 degree blacktop throw a cigarette and it'll be on fire before the cigarette even touches the ground.
I want you on my team when the Zombie hordes come lookin' for brainz to eat. Chemikills will be the way to go.
I agree. Please tell us more about Gasoline properties. Would simply pouring it into the top of a filing cabinet & lighting a match be effective?
If not, can you recommend another chemical, perhaps?
Sincerely,
Beef
However the thought of Bernake getting "burned to ashes" does make for an amusing visual.LOL
How about the Nazi that melts in the Indiana Jones flick.
I fully understand your anger.I was factory worker my jobs has been
cancelled over and over because of outsourcing,nobody seem to be
interested at figthing to keep production abroad Not the unions not
even the workers witch were handed a few fiat-candy's.
The problem as I see it is a combination of the draconian regulation/taxation on businesses and the American expectations driving up our cost of living.
Taxes/regulations that businesses face today force smaller competitors out of the market, and enforce mono/oligopolies. The only way to compete with these giants is to go overseas. Outsourcing is expensive, but American workers are more expensive. Taxes/regulations are one reason, the second being:
The American standard of living, and all the price expectation/misplaced value (see AAPL) causes workers to require a certain ammount of money to survive. Because of these expectations, the cost of living remains high as the competitive wage is lower than the necessary living wage. We've got some serious market distortions to blame.
Ceteris Paribus, decreasing the cost of American workers, both through a decrease in the cost of living and the cost of employing, will fix the outsourcing/unemployment problem and be a net gain for society as the expense of the infrastructure for outsourcing, along with the efficiency losses from distance/cultural incompatibilites/etc will be spent on hiring more workers and improving services/lowering prices.
Unfortunately, Ceteris isn't paribus
I want to clarify that the tax cuts must come from decreased government spending, not borrowing or printing money.
Airtime: Fri. Sept. 3 2010
"The big risk is that there will be a downturn in markets that could impact the bond, the equity and the credit markets," Nouriel Roubini, chairman of RGEMonitor.com, told CNBC when discussing the economic outlook Friday."
http://www.cnbc.com/id/15840232?video=1581589894&play=1
Super read! F*ck wasting a blindfold on the AH!
Yeah, I was thinking a tube of KY and a supermax prison gang would be more apropos.
On second thought, hold the KY.
Why aren't we shouting it from the rooftops !!! ALAN GREENSPAN, ROBERT RUBIN, BILL CLINTON, LARRY SUMMERS ! THIS IS THE SCAM OF THE CENTURY! I think it's called corruption & treason. As Dr. Paul Craig Roberts said, "Israel owns this government". Is the State of Israel bankrupt ? or, is it just the United States of America that's so deep in debt that default is inevitable ! SOMETHING FISHY IS GOING ON. & please don't junk me for speaking the truth !
you're a moron
May not pop yet.
----------------------------------------
Breaking News Alert: Obama's economic team considering new stimulus package September 2, 2010 5:21:20 PM
----------------------------------------
With the recovery faltering less than two months before the November congressional elections, President Obama's economic team is considering another big dose of stimulus in the form of tax breaks for businesses -- potentially worth hundreds of billions of dollars, according to two people familiar with the talks. Among the options are a temporary payroll tax holiday and a permanent extension of the research and development tax credit, say people familiar with the talks.
http://link.email.washingtonpost.com/r/0H2RO6/0GGQXY/2V9IAW/F1R6GN/NGQ5Z...
For more information, visit washingtonpost.com
----------------------------------------
Explore Washington Post content in a whole new innovative way. Click below to explore Time and Space ----- sponsored by Sprint.
http://timespace.washingtonpost.com/project/top-news/
----------------------------------------
Get breaking news alerts sent to your mobile phone. Sign up by texting NEWS to 98999.
Manage your e-mail subscriptions
To unsubscribe, click here
----------------------------------------
Copyright 2010 The Washington Post Company
Washington Post Digital
E-mail Customer Care
1150 15th Street NW
Washington, DC 20071
Thanks G. Lira for these jiving posts of late.
I recall back in '87, our Econ. 101 professor exclaimed to the class something like, "Alan Greenspan!? Who the hell is Alan Greenspan!? What hell has he ever done!? No one's ever heard of the guy! How the hell did he become Chairman of -The Federal Reserve-!? Now take Paul Volcker, he was one hell of a Chairman!"
Thankfully we don't generally do bullets and then make the family pay for it like you know where, but it is time for some rage:
http://www.youtube.com/watch?v=w211KOQ5BMI&ob=av2n
But seriously, it is time for serious conversations regarding responsibility for this mess to make its way into the mainstream.
http://www.c-spanvideo.org/program/189738-1 the defense rests.
Good thing for Maestro this ain't China!
BANZAI7 WHAT ME GREENSPAN MASK
http://williambanzai7.blogspot.com/2010/09/what-me-greenspan-mask.html
WALL STREET PIG
http://williambanzai7.blogspot.com/2010/09/pixelated-wall-street-pig.html
Everyone,
Both of these are worth a look. Good job WB.
Man you are getting really good with shooping.
Very amusing, WB7—but your Alfred E. Greenspan is far and away your best of the set.
Rock on.
GL
Loveable old Alan is a "made guy" nothing will happen to him that is not planned well in advance.
On a facetious note, instead of a firing squad, it should be "death by liquidity". Think millstone or very heavy, non-removeable shoes and a large, deep body of water.
On a more serious note, As DoChenRollingBearing commented earlier, citizens played a role in this. However, should a bond or currency crisis occur, the actions by key folks in the Fed, Executive branch, Congress, and the financial industry could be viewed at best as criminal, at worst, as treasonous. A firing squad in that situation would not befit them however. I would recommend a room for the rest of their lives at a spot such as Sing Sing, or San Quentin, where they can be paired with a concerned roommate who will help protect them from the rest of the prison population, much as they, in their prior roles, protected Americans from the depredations of the unsavory elements of the financial, corporate and political sectors.
Great analysis, but explain to me what is the root problem - the existence of a central bank at all or the captain at the helm? I contend the former. Banksters with an ultimate inside view (the FED) regulating the brotherhood of Banksters. This seems pretty simple to me.
"The US banking sector died in September 2008. A corpse pumped with blood does not rise to walk. It has not acted like a credit distribution apparatus in two years. The US Federal Reserve has served almost the complete function, filling the gap like with the decaying commercial paper market and perhaps 90% of the entire mortgage market. Its several dozen liquidity facilities testify to its urgent need to act as banking system substitute, since the real portion long since passed through the morgue. The major 100 banks in the US are almost without exception insolvent, and thus do not lend. Sure, they boast a positive book value, but only after given permission to use phony FASB accounting rules. They can declare their assets at any value they wish. In fact, on many debt securities, they actually declare unrealized losses as gains...The USFed is thus the chief Zombie Bank... The US bankers in firm control at the helm for two decades have run out of asset bubbles to blow.
"http://www.kitco.com/ind/willie/sep022010.html
Jim Willie is always good for a couple of laughs. I read his columns whenever they come out. He seems very connected. Perhaps the BIGGEST BEAR in town?
EDIT: Jim Willie in January or so 2008 said that 2008 would be the year "the system breaks". Nailed that one.
Jim's purple prose is always good for a chuckle.
I got largely out of equities in the summer of 2008. I hope to preserve some assets as I rapidly accelerate towards my glorious decrepitude. I can't afford to make mistakes, so I'm on the sidelines. Although I may not make much on my investments for a few years, at least I can sleep better. I'll know if I still have a job by December.
"He that fights and runs away, may turn and fight another day; but he that is in battle slain, will never rise to fight again."
-- Tacitus
Wow - and here he is from Sept 2006:
'The central question should be “Will the Greenspan legacy be directly linked to the upcoming crisis in housing and the USEconomy, which is of his own making?”'
http://www.kitco.com/ind/Willie/sep052006.html
2006! So much for the impossibility of spotting/predicting bubbles... Thanks for the link.
And from 2004!:
"No system can survive for long when its depends upon asset inflation as the primary wealth generating power source."
"[Greenspan] cites a growing federal budget deficit, which causes neither alarm nor desire for reduction. In my opinion, he is actively engaged in a publicity campaign to create an alibi for upcoming failures and systemic shocks. "
http://www.gold-eagle.com/editorials_04/willie092704.html
As Dr. Paul Craig Roberts said, "Israel owns this government". Is the State of Israel bankrupt ? or, is it just the United States of America that's so deep in debt that default is inevitable ! @ lynnybee
Apparentley Israel doesn't even own Israel, how can it own the U.S. Government?
Don't forget the incestuous relationship between Wall Street and the Media. GE-MSNBC host Andrea Mitchel is Mr. Greenspan's wife after all. GE CEO Immelt sits on the NY Fed board, etc., etc., etc.
Good night and good luck.
While the Fed has sopped up so much of the 'toxic assets' from the banks, now is the time to go BK on the Fed, leave them hanging with the crap and issue a new National currency like Lincolns greenbacks and what Kennedy tried to do with Executive Order 11110. A new currency based on PMs, not based on debt. That would leave Al, Ben, and the other bastards hanging by the noose of their own making.
More evidence against East Al:
In September 2007, Easy Al tells Leslie Stahl on 60 Minutes "I had no notion that subprime loans had become so significant until late 2005 or 2006."
See You Tube clip of 60 minutes episode: http://www.youtube.com/watch?v=m6b4qX_qm40
Greenspan's denial of any knowledge of the pending subprime debacle comes at around 1:05 into the clip, with additional lame but typical sputtering at around 2:40.
Now rewind to Greenspan's speech on April 8, 2005: "With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers...Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s."
So, Ladies and Gentlemen of the jury, it is clear that Easy Al knew that subprime loans were exploding in early 2005 and once again he was cheerleading his beloved technology, just like it was 1999. Turns out that his beloved technology and his Wall Street investment banker friends (who as we know all do God's work) could only "efficiently judge the risk" when house prices were rising in a bubble. Once the bubble stopped expanding, their risk judgements were proven to be horribly wrong, as shown by Bear Sterns, Lehiman Bros, Countrywide, Wachovia, WaMu, AIG, GM, Chrysler etc.
Now pull out a chart of subprime loan delinquencies. Where do you think it bottoms out and then starts rising dramatically thereafter?. Yep, around April 8, 2005, the exact date of Easy Al's speech.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said.
1988 speech, as quoted in The New York Times, October 28, 2005.
"Since becoming a central banker, I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said." Guardian Weekly, November 4, 2005.
“I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk.”
September 2007, Greenspan's memoir The Age of Turbulence: Adventures in the New World.
http://en.wikiquote.org/wiki/Alan_Greenspan
Listening to clips of "Easy Al" from various time periods, I have reached a conclusion...
Alzheimer's is a terrible thing for a central banker.
This is the kind of stuff people should be seeing on their nightly news and local papaer instead of being feed propaganda.
I do not have the link, but they did a survey among economists and Greenspan was the primary culprit.
To me a big examination needs to be how the economic thought that became the norm just happened to be the thought that justified their making the most money. it is as if the bankers got their chosen school of economics adopted. Which they clearly have under Bernanke.
We gave the entire fucking industry the power to regulate itself and the keys to the money supply. It is disgusting. It isn't changing.
Main blame lies with voters. Can't get elected without promising growth. Can't grow without cheap energy. Can't have cheap energy since supply peaked in 2005 and demand from China is growing. AG squeezed out one last gasp of growth with cheap money and by turning a blind eye to misdeads in US's only growth industry (financials).
Good piece on it self but did not George W. Bush already push sub prime mortgage along with Clinton? Meaning who wants bubbles? The political leaders, to get elected and relected? The funders of political campaings?
Last but not least the people! People have their own responsibility. They did not care they only wanted to consume for the last 30 years. Piling up their debt. Not able to handle austerity and elect politicians who can give them more to consume.
The patient is now on life support and still does not learn from it own faults but only pinpointing everyone except them self.
Bush tried to rein in Fannie and Freddie, the Democrat Congress refused. Of course, W trusted the banksters when they came up with TARP. People didn't know how big the scam was until the bail out mania got going. That ignited the Tea Party.