Posted on 05/15/2009 8:10:42 PM PDT by sickoflibs
When, during the invasion of Iraq, the United States Government issued its famous deck of playing cards with the 52 arch villains of the Iraqi police state, Saddam Hussein's face adorned the Ace of Spades. If the Obama Administration wanted to engage in a similar public relations campaign for the real estate crisis, the top card should be reserved for Alan Greenspan.
Yet in a speech this Tuesday before the National Association of Realtors, Sir Alan "the-bubble-blower" claimed that his low interest rate policies in the early and middle years of this decade had no effect on mortgage rates or real estate prices. As a result, he claims no responsibility for the subprime mortgage crisis. But even current Treasury Secretary Timothy Geithner, who shared interest rate policy responsibility as governor of the New York Fed during the Greenspan regime, recently admitted that overly accommodative policy helped inflate the bubble. So what does Greenspan know that everyone else doesn't?
His primary defense is that mortgage rates were a function of long-term interest rates which were simply not responding to the movement in short term rates, which he did control. While it is true that the flow of capital from foreign creditors with excess dollars did keep long rates low despite rising short rates, this "conundrum" was not the leading factor in the housing bubble. Although rates on thirty-year fixed rate mortgages are based on long-term bonds, by 2005 such loans had become an endangered species. The housing bubble was all about adjustable-rate mortgages with 1-7 year teaser rates primarily based on the Fed funds rate.
The rock bottom teaser rates, permitted by the 1% Fed funds rate, were the primary reason that many home buyers were able to qualify for mortgages they couldn't otherwise afford, and in turn, to bid up home prices to bubble levels. By pushing down the cost of short-term money, the Fed enabled homebuyers to make big bets on rising real estate prices. Without the Fed's help, few borrowers would have "qualified" for these risky mortgages and real estate prices never would have been bid up so high.
Greenspan expresses exasperation now, as he did then, that his careful nudging of interest rates higher by quarter point increments did not translate into corresponding increases in long-term rates. Unfortunately, according to Greenspan, the markets would not cooperate with his wise guidance, and to his dismay, mortgage rates fell despite his best efforts. As they say in Texas, this dog will just not hunt. If the "measured pace" of his quarter point hikes were too slow to produce the desired effect, why didn't Greenspan jack up the pressure? With interest rates far below the official inflation rate for many years during the bubble, he certainly had plenty of room to maneuver. The claim that he was unhappy results of his rate hikes, despite his having done nothing to adjust that policy, is ridiculous.
In addition to his colossal errors on interest rate policy there were many other ways Greenspan blew air into the real estate bubble. One example was what the market called the "Greenspan put." By creating the perception in word and deed (since proven accurate) that the Fed would backstop any major market or economic declines, lenders became more comfortable making risky loans. In an often quoted 2004 speech, Greenspan went so far as to actively encourage the use of adjustable-rate mortgages and praised home equity extractions for their role in contributing to economic growth. In fact, rather than criticizing homeowners for treating their houses like ATM machines, he often praised the innovative ways in which such homeowners were "managing" their personal balance sheets. Greenspan was as much a proponent of leverage for homeowners on Main Street as he was for bankers on Wall Street.
The bottom line is that Greenspan fathered the housing bubble and now he refuses to acknowledge kinship of his wayward child. His denial of responsibility is an act of stunning bravado, and is a testament to his ability to turn even the simplest of situations into an impenetrable tangle of theories and statistics. The private sector jokers who now hold top dishonors in our pack of economic villains are easily trumped by the Maestro. The fact that Greenspan still has any credibility shows just how little understanding the general public, including Wall Street and the media, actually have about this crisis.
$5000 in fines ??? It was $2000 but meanwhile they would cost the taxpayers 5-10 times that PER YEAR, and the word ‘fines’ is a joke, it was a tiny fee. So was the so called requirement to leave, here's a list of all the loopholes and another of the costs:
and The Fiscal Cost of Low-Skill Households to the U.S. Taxpayer
You disgust me with your utter dishonesty. You are contemptable.
You win the prize for illiterate thought.
Now go back to your making up lies about someone else making up lies. Have you always been the type to drink the gape punch by the gallons???
$2,000 is a large fee for someone earning Minimum Wage, but the point is that you *know* that the fine was in Bush’s proposal...and in spite of knowing that the punishment for being illegal was there, you continue to lie that Bush was promoting “amnesty” as if you didn’t know that “amnesty” means “no punishment.”
And it is by your own words that I find you entirely dishonest.
You disgust me.
LOL
You are not going to make us like GWB any better by defending the 2007 amnesty bill, which really did a lot of damage to what was left of the Republican Party.
Try mentioning his supreme court appointments. Talk about how he kept us safe from terrorist attacks.
You don’t have to like GWB. It’s a free country. But if you lie repeatedly, knowingly, about him, yeah, that’s going to disgust me.
Interest rates didn’t cause the housing bubble, it was making loans to people with nothing down and no income to repay the mortgages!
Demanding 20% minimum down and no more than 30% of income for payment would have eliminated the entire problem.
Or better, just mention supreme court appointments minus Harriet Myers. There is a reason Obama is trusted (polls) far more than GWB and republicans on national defense and it is not because Obama is a great leader.
Defending Amnesty is a great strategy. it shows you(Southhack) will say anything to defend Bush
When we talk about low interest rates we are talking about creating new money. This causes many problems in the long run but in the short run it is done to create a party. Everyone loves the party(but not the hangover) , everyone feels richer.
More people have more money, but there is not more things to go along with that new money. Also it deters savings and promotes speculation and debt.
The opposite argument than yours can be made too, that those requirements for loans were eased BECAUSE the house values were going up, because of the bubble they looked like safe loans. Plus we were told by Bush and even talk radio show hosts (and most others) that the bubble was real, that it was real economic growth. So easy requirements and temporary cheap money fed each other and the bubble
You’re one sick son of a bitch!
RE :”You’re one sick son of a bitch!”
I am guessing that last part you dont like, but it’s true. The time for the simple-ton contradictory talking points is over, they lost two elections.
Anyone thay lives on borrowed money should lose everything they have!
If you can’t pay for it you don’t need it.
When we bought our home you eitherf put down 20% and had income that your payments, insurance, and taxes didn’t exceed 30% of uour take home income.
If those standards had been adhered to there would have been no housing bubble and 50% of the deadbeats that bought or refinanced in the last 10 plus years wouldn’t be squating on real estate today!
I’m hoping that we actually go into a depression worse than 29 and waste everyone that is living on credit!
Either earn and pay your life or quit taking up space on this planet.
Bush/McCain brilliant strategy: “Hey, if we call the $2,000 naturalization fee “a fine” we can claim it's not amnesty, even though stupid immigrants that actually follow the rules pay that too but have to wait 8 years to get a green card and we just reward illegals WITH a immediate pass for breaking the law.
By changing term 'fee' to 'fine' our robots can call all our critics liars!”
OK Southack, I will save you some typing :
"Your Bush lies make me sick. I spit on your traitorous lies. That's all you do is lie, lie and repeat your lies. Liar, liar pants on fire. You disgust me with your lies. Lies, lies , lies."
Thanks for thoughtful comment. It gave the illusion that the invasion +reconstruction were free, paid for by tax cuts (all that real economic growth) . This is still repeated on Rush, Hannity and Levin today . These guys have to know better.
Ironically Reagan/Carter/Volker made money sound again after 1970s disaster and Bush/Greenspan reversed this and now talk radio must ignore history to keep their narrative about Bush tax cuts.
You need competent mental help. Stat.
RE :”You need competent mental help. Stat.’
You are amusing.
OK Southack, I will save you some typing :
“Your Bush lies make me sick. I spit on your traitorous lies. That's all you do is lie, lie and repeat your lies. Liar, liar pants on fire. You disgust me with your lies. Lies, lies , lies.”
Where is the fence? Ole Turd was supposed to build?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.