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Courtesy of Damien over at Wall St. Cheat Sheet
We have worked hard this year to award great journalism and excellent work. Now we’d like to present our first Dead Battery Award to former Federal Reserve Chairman Alan Greenspan:
All glory is fleeting.
Amen to that.
What's the music? Great riff!
"bullet in the head" by rage against the machine
Fails to load, over and over and over.
Youtube, why do you suck so hard?
"Destroyer of the free market"
"Blower of Balloons"
"Man/shar pei mix"
Blower of the banking elite, no?
THE QUEEN OF ENGLAND DID NOT GRANT KNIGHTHOOD ON THIS TRAITEROUS FUGITIVE FROM A DOUCHE BAG FOR A MERE NOTHING. ENGLAND COULD NOT DEFEAT UPSTART AMERICA ON THE BATTLE FIELD, SO THEY RESORTED TO A FINANCIAL WAR TO RECLAIM THEIR COLONY, COMPLETE WITH SPIES AND TRAITORS.
"MONEY IS THE GOD OF THIS WORLD AND ROTHSCHILD IS HIS PROPHET"
On October 21, 1929 the Great Crash "began". On October 24, at the height of the panic, Winston Churchill appeared briefly in the visitors' gallery of the New York Stock Exchange to view the boiling trading floor and savor the chaos he had wrought. On October 29, the principal market index lost 40 points on a volume of almost 12.9 million shares, an all-time record in that epoch.It was not mere coincidence that churchill, the Chancellor of the Exchequer knew at what time the curtain would go up on the wall st. cabal's massive, orchestrated selloff. After the dust of the collapse later settled the,conspiritors were able to proceed to buy up the industrials for pennies on the dollar.
By Alan GreenspanMarch 11, 2009Wall Street Journal
We are in the midst of a global crisis that will unquestionably rank as the most virulent since the 1930s. It will eventually subside and pass into history. But how the interacting and reinforcing causes and effects of this severe contraction are interpreted will shape the reconfiguration of our currently disabled global financial system.(“In retrospect, I see nothing that we did that was inappropriate in terms of policy.”)
There are at least two broad and competing explanations of the origins of this crisis. The first is that the "easy money" policies of the Federal Reserve produced the U.S. housing bubble that is at the core of today's financial mess.(“I do not deny that many appear to have succeeded in a material way by cutting corners and by manipulating associates, both in their professional and in their personal lives.")
The second, and far more credible, explanation agrees that it was indeed lower interest rates that spawned the speculative euphoria. However, the interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages. Between 2002 and 2005, home mortgage rates led U.S. home price change by 11 months. This correlation between home prices and mortgage rates was highly significant, and a far better indicator of rising home prices than the fed-funds rate.(“The Fact that our economical models at The Fed, the best in the world, have been wrong for fourteen straight quarters, does not mean they will not be right in the fifteenth quarter.”)
This should not come as a surprise. After all, the prices of long-lived assets have always been determined by discounting the flow of income (or imputed services) by interest rates of the same maturities as the life of the asset. No one, to my knowledge, employs overnight interest rates -- such as the fed-funds rate -- to determine the capitalization rate of real estate, whether it be an office building or a single-family residence.
The Federal Reserve became acutely aware of the disconnect between monetary policy and mortgage rates when the latter failed to respond as expected to the Fed tightening in mid-2004. Moreover, the data show that home mortgage rates had become gradually decoupled from monetary policy even earlier -- in the wake of the emergence, beginning around the turn of this century, of a well arbitraged global market for long-term debt instruments.(“History has not dealt kindly with the aftermath of protracted periods of low risk premiums.")
U.S. mortgage rates' linkage to short-term U.S. rates had been close for decades. Between 1971 and 2002, the fed-funds rate and the mortgage rate moved in lockstep. The correlation between them was a tight 0.85. Between 2002 and 2005, however, the correlation diminished to insignificance.(“There's potential for individual disaster there.”)
As I noted on this page in December 2007, the presumptive cause of the world-wide decline in long-term rates was the tectonic shift in the early 1990s by much of the developing world from heavy emphasis on central planning to increasingly dynamic, export-led market competition. The result was a surge in growth in China and a large number of other emerging market economies that led to an excess of global intended savings relative to intended capital investment. That ex ante excess of savings propelled global long-term interest rates progressively lower between early 2000 and 2005. ("Anything that we can do to raise personal savings is very much in the interest of this country.")
That decline in long-term interest rates across a wide spectrum of countries statistically explains, and is the most likely major cause of, real-estate capitalization rates that declined and converged across the globe, resulting in the global housing price bubble. (The U.S. price bubble was at, or below, the median according to the International Monetary Fund.) By 2006, long-term interest rates and the home mortgage rates driven by them, for all developed and the main developing economies, had declined to single digits -- I believe for the first time ever. I would have thought that the weight of such evidence would lead to wide support for this as a global explanation of the current crisis.
However, starting in mid-2007, history began to be rewritten, in large part by my good friend and former colleague, Stanford University Professor John Taylor, with whom I have rarely disagreed. Yet writing in these pages last month, Mr. Taylor unequivocally claimed that had the Federal Reserve from 2003-2005 kept short-term interest rates at the levels implied by his "Taylor Rule," "it would have prevented this housing boom and bust. "This notion has been cited and repeated so often that it has taken on the aura of conventional wisdom.("Any informed borrower is simply less vulnerable to fraud and abuse.")
How much does it matter whether the bubble was caused by inappropriate monetary policy, over which policy makers have control, or broader global forces over which their control is limited? A great deal.(“Difficult to suppress growing market exuberance when the economic environment is perceived as more stable.”)
If it is monetary policy that is at fault, then that can be corrected in the future, at least in principle. If, however, we are dealing with global forces beyond the control of domestic monetary policy makers, as I strongly suspect is the case, then we are facing a broader issue.(“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said.”)
If we are to retain a dynamic world economy capable of producing prosperity and future sustainable growth, we cannot rely on governments to intermediate saving and investment flows. Our challenge in the months ahead will be to install a regulatory regime that will ensure responsible risk management on the part of financial institutions, while encouraging them to continue taking the risks necessary and inherent in any successful market economy.(“The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.")
So if I understand Yoda correctly (and how could I?), the low Fed Funds rate diverged from long term mortgage rates just in the nick of time to avoid any argument that Easy Al had anything to do with the bubble, and that Taylor is just jealous of Al's masterful handling of the economy for 19 years. I noticed that Krugman not long ago said that he along with "other economists" had figured out a way to blame China's currency policy for our housing bubble, and Al (again, to the extent that this is decipherable English), appears to be one of those economists. As the Church Lady said, how convenient.
WTF!! YouTube says: "This video is not available in your country due to copyright restrictions".
No, I'm not in China or North Korea - I'm in Germany.
Music is "bullet in the head" by rage against the machine
all their music is awesome!
You have to be seriously be joking.
Shit, even 'music' has gone thru the looking glass.
Rap is awesome, but it sure as hell ain't music. It's more an angry, agonized, piercing cry from the heart for the sons and daughters of anarchy. A machine gun going off with
a pronounced rhythm.
.....we the people!
Tyler, please use whatever contacts and influence you have to warn the Senate against reappointing Ben Bernancke. They don't read your site, or understand it (I assume), so please reach out to them in any way you can. If another petition is in order, I will be among the first to sign.
Greenspan's Body Count is still rising:
Not for this hero.
moar interesting link
Uh, actually, Alan Greenspan was NOT the kind of person that Ayn Rand hated. That's why they were friends, and Greenspan was among a small group of people Rand invited to her home to discuss her work.
Jesus, get your facts straight. I know the abject failure of free market fundamentalism must be emotionally devastating for a libertarian, but don't just make stuff up to preserve the legacy of your false idols.
please please please remember why greenspan is what he is and why he has and is so incompetent (except at self aggrandisement)
he is a follower of Ayn Rand, her novel (ha ha), Atlas Shrugged, is the second most admired book in the US after the bible (might be a hint here- overly long, rambling and needs faith and blinkers).
Rand was a testosterone pumped lady who preyed on her accolytes. what do you expect of a man who makes kermit look like clark gable?
one needs to look at a persons' influences to better understand their behavior. his incompetence was pre-ordained
Yes, the maestro glory is gone now that we know what the housing bubble outcome (due to low interest rates for too long) has been. And the amazing thing is that we are now doing exactly the same anyway!
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