Posted on 03/04/2009 6:08:34 AM PST by dennisw
Looking for someone to blame for the shambles in U.S. financial markets? As someone who owns both an investment bank and commercial banks, and also runs a hedge fund, I have sat front and center and watched as this mess unfolded. And in my view, there's no need to look beyond Wall Street -- and the halls of power in Washington. The former has created the nightmare by chasing obscene profits, and the latter have allowed it to spread by not practicing the oversight that is the federal government's responsibility.
I find it hard to stomach the fact that investment banks that caused this financial crisis immediately ran to the government asking for assistance, which Bear Stearns received and Lehman Brothers, thankfully, did not. This is one of many eerie parallels that the current meltdown bears to the Great Depression, when Washington and the taxpayers had to step up and take unprecedented action to stabilize the financial markets and the economy. Unfortunately, the government today has already put enormous taxpayer resources at risk -- bailing out investment firm Bear Stearns, mortgage giants Fannie Mae and Freddie Mac and insurer AIG, and proposing to buy risky assets from the banking system -- to stop the economy from plummeting into another depression. But these events only underscore the toxic relationship between Washington and Wall Street that has brought us to this point.
(Excerpt) Read more at washingtonpost.com ...
READ IT ALL or remain flailing about in the dark
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Great article - nails much of what happened. I would add lack of regulation of ratings agencies as well, which masked the underlying risk.
I read it in Sept.
I’ll risk flailing once without reading it all: “obscene” profits sounds like a term of the class warfare ideologists.
Franklin Raines, Jamie Gorelick, Chris Dodd and Barney Frank should all hang for there parts in this.
Wouldn’t be suprised if Bob Ruben and Eric Holder were involved!!!
He really doesn’t talk about the Fannie Mae Fraudulent Financials that caused this crisis. Bawney Fwag and Chris Dodd are at the heart of this corruption.
Pray for America
“In the run-up to the millennium, the Federal Reserve, led by then-Chairman Alan Greenspan, began to pump money into the capital markets to deal with any financial problems that might arise from a Y2K meltdown. In the end, 2000 arrived to nothing but a wonderful celebration. But the monetary stimulus, coupled with the aforementioned hype, created an unfortunate bubble in Internet, technology and telecommunications stocks. “
“In an effort to offset the economic strain from these losses, the Fed once again rapidly increased the money supply and slashed short-term interest rates to 1 percent — a level that hadn’t been seen in more than 45 years. This enormous monetary stimulus (along with significant federal spending) energized the overall economy, but it also led to the greatest housing boom — and possible bust — this country has ever encountered. From 2002 to 2006, housing values appreciated at an astounding rate of 16 percent per year. It became impossible for the typical American family to buy an average-priced house using a conventional 30-year fixed-rate mortgage. Wall Street found another perfect opportunity to propel and take advantage of another forming bubble.”
Not a word about the government thugs who forced banks to make loans to poor risks. Not a word bout B. H. Obama filing a lawsuit on behalf of ACORN forcing Citibank to open up its lending policies to disadvantaged groups. Not a word about Frank, Schumer, Dodd, et al, who laid the groundwork for this mess and are now claiming they are going to rescue us.
Feh.
AAA rated toxic waste.
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
-~~Ludwig Von Mises
And America voted for it in Nov.
thanks for posting that.
Wall Street conducted class warfare on Main Street. Wall Street made class warfare on you and average Americans
The real libertarians on Free Republic despise big Government PLUS are very wary of Wall Street too.
Wall Street took home billions playing their derivatives games---- Now you get to pay for their bailouts
He does talk about it. The credit bubble would have popped without it however. Credit cannot grow to infinity.
If you like it then it is good! -— The writer is saying what I have been saying but much better, plus with real world banking and investment banking credentials
Peanuts compared to the tract mansion investors here in Loudoun county.
Thing is, Wall Street is partly to blame for this and Obama, rather than punishing Wall Street is punishing the investors.
The rich investors will find a way to get bailed out of this ala Madoff. The rest of us will lose our life savings.
Yes, he does:
This is no doubt the same reason why so many members of Congress were consistently blocking attempts to reform and downsize Fannie Mae and Freddie Mac, which are essentially giant, undercapitalized hedge funds. These two entities have been huge money machines for Democrats in both the House and the Senate, many of whom recently had the gall to ask why these companies hadn't been reformed in the past.
He can't cover every last detail in a newspaper editorial, but he put the core blame for Fannie and Freddie squarely where it belongs.
Conversely, we can't run around blaming all of this on Fannie, Freddie and the CRA. The GOP itself bears quite a bit of blame for what has transpired. The core problem comes down to corruption across the board in Congress, Wall Street, banks, ratings agencies, AIG and other companies involved in creating unregulated and unsustainable derivatives.
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