Atlas Shrieked

Campus Report ^ | June 16, 2009 | Mytheos Holt

[bs9021]

Atlas Shrieked

by: Mytheos Holt, June 16, 2009

In recent weeks, former Federal Reserve Chairman Alan Greenspan has found himself increasingly under public assault, both for his actions leading up to the current financial crisis, and for his attempts to defend these actions. In the April issue of the “Free Market” newsletter produced by the Ludwig von Mises Institute, economist Robert P. Murphy devotes an article to exploring what he sees as the failures of central banking systems generally, and Greenspan, specifically.

Murphy’s article, entitled “Greenspan’s Bogus Defense,” argues that Greenspan’s rate-setting policies destabilized the relation between federal interest rates and mortgage rates and “the reason that the correlation between the federal funds rate and the 30-year mortgage rate broke down during the housing boom was that Greenspan whipsawed short rates way down, then way up, in a fairly narrow window.”

This contention aims to repudiate a Wall Street Journal op-ed by Greenspan, published in March of this year, which argues that the artificially low interest rate responsible for the crisis was not the responsibility of the Fed. “It was indeed lower interest rates that spawned the speculative euphoria,” Greenspan wrote. “However, the interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages.”

Greenspan argued that the mortgage rate failed to respond to economic pressure from the Federal Reserve—pressure which he tried to administer upon noticing its distorting effects. Murphy dismissed this claim, writing that Greenspan “stopped short of breaking through mortgage rates once the federal-funds rate plateaued in June 2006 at 5.25 percent. If [Greenspan] really had wanted to push up mortgage rates, he could have pushed up the federal-funds rate more.”...

[spintreebob]

Short term rate fueled ARMs - Adjustable Rate Mortgages.
Greenspan and the Fed contributed to the problem.

Barmey/Chrissy/Freddie/Fannie/CRA contributed to the problem. Lyings Mortgage companies and brokers contributed.

But most of all, stupid people who thought housing values would always go up contributed the most to the problem. That includes AIGs credit swap wunderboys. It includes low income buyers. It includes speculators who assumed they could always flip it ...or just walk away from it if they couldn’t flip it.

[investigateworld]

As I was saying wayyyy back in 2006/2007, where are the adults?

[PGR88]

Atlas not only shrugged, he’s being chained and beaten!