[Ragnar54]

Yes, there was a housing bubble and yes it burst. And yes that always happens.

This time, the bubble was artificially prolonged by the government mandating loans that should not have been made and by massive fraud at Fannie Mae and Freddy Mac. Financial instruments based on the assumed value of the fraudulent loans were of course overvalued. The risk associated with the loans was underestimated.

Additional damage was done by the selective "bailout" (courtesy of the taxpayer) of some favored financial institutions. In addition to the initial cost to the taxpayer, keeping such institutions (e.g., Fannie and Freddie) alive will only perpetuate the problem. Further, the massive bailouts were used as justification for the obscene "stimulus" packages.

The current attack on Greenspan by Obama's minions is just part of the overall assault on capitalism by the communist in chief. Greenspan was the most recent Fed chairman with no Obama connection (Obama renominated Bernanke, so Bernanke can't be at fault!). The solutions proposed by the neo-communist (Democrat) party always involve more government control, so of course enemies of the state will be demonized for daring to suggest any sort of market solution to a problem.

[parsifal]

Frankly, this particular capitalist needs castigation. This is where the overblown Libertarian economic nonsense meets the real world. The government isn’t the source of all of our problems. Sometimes it’s us.

The world isn’t that simplistic. Ayn Rand’s heroic kids playing pirates is a fun fantasy. When it leaves the bedroom, though, it ceases to be cute. You might want to try this on. This is a real good site for separating the truth from the myths. Another good one is the Market Ticker.

http://www.nakedcapitalism.com/2010/03/debunking-michael-lewis-subprime-short-hagiography.html

parsy, who wishes things really were that simple

[dangthis]

This calls for an explanation of the speculative market in housing. What drove the prolonged bubble was the easy access to buyers. The loan requirements were deliberately manipulated by government mandate. They lowered the requirements and that allowed the number of people that could qualify to increase. That made the number of houses still sought by buyers to increase. That caused the prolonged extension. The bubble collapsing was artificially propped up for a time.

Actually I agree with you.

But this I don’t: “The current attack on Greenspan by Obama’s minions is just part of the overall assault on capitalism by the communist in chief.”

Brooksley Born is not a Obama plant. She is not an anti capitalist. She’s the one that takes the red herring off the trail. She’s the government worker with the credibility to show where the truth exists. You are still following the red herring. They want you to not see this. They want you to think it’s an Obama plot so you wont look at it. It wont kill you to look past your suspicions. The liberals took a government enterprise and turned it into their cash cow. Then they sent us a bill when it fell apart. Killing off capitalism is tangential and is what makes them tick. They were only in this for the money. It was pure greed. They used government to set themselves up as capitalists. That’s what they are afraid of coming out. You are only helping them do that. It was a planned rip off from the start. They new that it was too big to fail. The bail out money came back. The stimulus money became deficit spending that would never be paid back.