Posted on 08/04/2009 11:06:40 PM PDT by fiscon1
How did we get here? Here is a detailed analysis as I see it today and have seen it for the last nearly seven years from inside the mortgage industry.
At the end of 1999, Alan Greenspan first began raising the Prime Rate. Many have speculated as to his motivation, however there is no doubt the result, he popped the internet bubble. By the time the damage was done roughly three trillion dollars had been lost in the stock market by the end of 2000. This jarring economic event was followed by the jarring economic events of 9/11 and the revelations of malfeasance at Enron, Worldcom, et al. As such, by the end of 2001, our nation was on the brink of economic disaster. Ironically, one of the by products of the weak economy was a strong housing sector. That's because the weak economy helped usher in a low mortgage rates. (interest rates, in their simplest form which of course rarely happens, work in the opposite way of the health of the economy) While President Bush was cutting taxes, Alan Greenspan was busy furiously lowering interest rates. By the time he was done, Alan Greenspan had dropped the Fed Funds Rate below 1%. I put most of the blame on this crisis on Greenspan himself as a result of this irresponsible rate decrease. As you will see, what happened afterwards was the culmination of the monster started by this rate decrease.
(Excerpt) Read more at theeprovocateur.blogspot.com ...
Great post.
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