Greenspan admits deregulation an error

Discussion in 'Politics' started by Phil Ayesho, Oct 23, 2008.

  1. Phil Ayesho

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    So in testimony to congress Greenspan finally admitted Uncle Miltie's idiotic ideas turn out to not be so sound after all.

    Nice to see a conservative who is capable of recognizing reality and changing his mind about his religion...

    He still seem baffled by the fact that it seemed to "work for 40 years"- totally ignoring or unaware that serious and comprehensive deregulation across the board has been steadily increasing with rising republican power over the past 12 years... seeming incapable of understanding how deregulation interacts with a world economy where OTHER nations have much greater growth... and therefore attract all real capital, leaving everyone else borrowing.

    But at least he can see, and can admit that, the rich can not be trusted to "self regulate"... maybe in a few years time he will be able to admit that the super rich usually get that way by being unscrupulous... and that unscrupulous people with access to billions of dolllars need to be scrutinized far more than the averagte joe.

    He also points out that 60% correct in economic forecasting is considered extraordinarily accurate...

    That's funny... being just BARELY statistically better than chance is considered a success in economics?
    In every other branch of science, such poor performance is conclusive proof that your theories are incorrect.



    Maybe, just maybe this country will wake up to the recklessness of investing the entire national economy in unproven ideas that do not work well in models.

    Maybe we can get away from the Absolutism of republican thinking... that frighteningly fascist moral certainty that enables them to kill 500,000 innocent Iraqi's without any qualms as easily as they dismiss the criminal conduct of their political leaders....

    Its time for Americans to stop thinking of the structure of society like its a football game with one idea pitted against another...
    A free civilization mixes BOTH regulated captialism AND limited socialism.

    We have always HAD both... its time to stop treating either one as the incarnation of evil and recognize the importance and mutual reliance of both.


    And, seriously... you young folk... you need to start pressing the planning for a POST capitalist future economy... because you will live to see it.

    In 50 years, the world will be AS affluent as it will ever be... and population will begin to drop.

    NO MORE GROWTH... either means no more capitalism, or it mean permanent recession.

    The nobel prizes will go to the guys who can come up with a workable economic theory for a world without growth.
     
  2. tripod

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    Greenspan and his wench Andrea are two of Washington's biggest gobtards... it's nice to see that he is finally admitting that he was wrong. That was a very well written post Phil. :smile:
     
  3. 1BiGG1

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    Of course like usual Phil is spouting of garbage in the fashion of a drama queen extraordinaire but when asked repeatedly he will never provide any facts supporting his illusion. :rolleyes:
     
  4. faceking

    faceking Well-Known Member

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    Germs? Uh-huh. In the eighteenth century, no such thing, nada, nothing. No one ever imagined such a thing.

    No sane person, anyway. Ah! Ah!

    Along comes this doctor, uh, uh, uh,

    Semmelweis,
    Semmelweis.

    Semmelweis comes along. He's trying to convince people, well, other doctors mainly, that's there's these teeny tiny invisible bad things called germs that get into your body and make you sick. Ah? He's trying to get doctors to wash their hands. What is this guy?

    Crazy? Teeny, tiny, invisible?

    What do you call it? Uh-uh, germs? Huh? What? Now, cut to the 20th century.

    Last week, as a matter of fact, before I got dragged into this hellhole. I go in to order a burger in this fast food joint, and the guy drops it on the floor. Jim, he picks it up, he wipes it off, he hands it to me like it's all OK. "What about the germs?" I say. He says, "I don't believe in germs. Germs is just a plot they made up so they can sell you disinfectants and soaps." Now he's crazy, right? See? Ah! Ah! There's no right, there's no wrong, there's only popular opinion.
     
  5. faceking

    faceking Well-Known Member

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    Typical uneducated emotional liberal rhetoric a la LPSG, ...expert media ambulance chasers.
     
  6. JustAsking

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    Congressman Henry Waxman "My question is simple. Were you wrong?"

    Greenspan "Partially ... I made a mistake in presuming that the self-interest of organisations, specifically banks, is such that they were best capable of protecting shareholders and equity in the firms ... I discovered a flaw in the model that I perceived is the critical functioning structure that defines how the world works. I had been going for 40 years with considerable evidence that it was working exceptionally well.

    Greenspan was wrong about something that almost anyone who has ever been in a boardroom could tell you. How could anyone expect business executives to do anything but push the boundaries of everything that is legal in order to maximize their profit.

    In America, the CEO has one obligation, and that is to maximize shareholder value. And in America, the shareholder is mostly concerned with quarter to quarter results. Has anyone here ever worked in corporate America and never hear the refrain, "So what have you done for me THIS quarter?".

    The entire compensation structure in all the executive teams in all the corporations rewards very short term decisions that maximize earnings quarter to quarter. Each executive knows that all he has to do is hold things together for just long enough to be promoted out of the house of cards he has built. If the horizon is short enough, good PowerPoint will get you out of anything.

    Executives at the highest level are like crack users. In order to sustain their performance and maximize their quarterly earnings, they have almost no choice but to do cruel and unusual things to their business that goes right up against the envelope of legality and a bit beyond.

    To trust all these guys in a completely unregulated market is insane. That Greenspan didn't see this shows that in the area of human nature he is delusional.

    I an a Hamiltonian Capitalist who thinks that capitalism is an awesomely powerful force that is the very engine that sustains this great country of ours. But like Hamilton, I believe that some amount of regulation is necessary to keep it from consuming itself and everything around it by its corrupting influence on human nature.

    Like a crack addict, the corporate CEO is powerless to help himself and needs some family intervention from time to time. He is not necessarily a bad guy. He is just incapable of controlling himself. The culture of American business is stacked against him.
     
  7. sargon20

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    Excellent post.

    That in a nutshell is the problem with the idea that private industry can do no wrong and can do everything better than government. The last two months have proven that idea spectaculary wrong. CEO's have a fudiciary duty to its shareholders and no one else. At least government does have to answer to it's citizens.

    Everyone should see The Corporation Film: Welcome .

    The Corporation Movie Part 1
    The Corporation Movie Part 2

    What is unfathomnable is how anyone didn't know that real estate was a disaster waiting to happen. How can home prices go up 15-20% a year while wages stagnate at 3% growth a year? Wages ultimately pay the mortgage. So who didn't know something had to give? Greenspan thought the landing would be gentle but it didn't turn out that way.
     
  8. SpeedoGuy

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    Imagine where we'd be if Social Security had been entrusted to the capable and compassionate clutches of Wall Street.
     
  9. sargon20

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    Yep and that's exactly what the plutocrats and The Masters of The Universe wanted. To get all that money from governments hands and in theirs. The ultimate Robin Hood in Reverse which exactly describes the Bush presidency.

    The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

    But OF COURSE those top 300,000 are so smart and work so HARD they DESERVE to make 440 times the average person. Those bottoms just don't like to work.
     
    #9 sargon20, Oct 23, 2008
    Last edited: Oct 23, 2008
  10. B_starinvestor

    B_starinvestor New Member

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    Hold on a second, Alan. This wasn't Enron.

    This was a perfect storm - much more complicated than simply providing loose credit.

    1. Real estate prices began rising rapidly during the bear market of 2000 - 2002. People wanted an asset they 'could touch' and ran from stocks that caused much pain for many during that period. Real estate prices began to artificially inflate because of outflows from stocks and inflows into real estate. Out of stocks into real estate

    2. Interest rates were dropped precipitously by Greenspan and gang to stimulate the economy during the same period - making deposit accounts unattractive, and financing/credit quite cheap. If Joe Schmoe could buy a $200,000 house with a $2K payment in 1999, he could now buy a $350,000 house with the same $2K payment in 2002. Again - artificially inflating home values. Upgrading home with same payment

    3. Investors couldn't find competitive yields in deposit accounts because of low interest rates. They had just been burned by stocks. So where do you go? Real Estate. Artificial inflation again. Out of deposit accounts into real estate

    Those three scenarios have never converged in unison in U.S. economic history. This was already a bubble. A big one.

    Now fold in the subprime situation. Kaboom. Corporate malfeasance is getting more credit than it deserves (no pun intended) on this mess. This was a perfect storm. Many had parts in it, but even if banks/lenders pulled in the reigns on high LTV loans and subprime lending, we would still be in a helluva mess due to the reasons listed above. Subprime just inflamed the disaster into unprecedented crisis.


     
  11. SpeedoGuy

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    And it looks like the Masters eventually did get the taxpayers' money, albeit later than expected. At least $850+ billion worth.



    That just can't be true. I've been assured over and over and over that taxes are so prohibitively high nobody can get rich anymore. :rolleyes:
     
  12. JustAsking

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    Yes, you are right about that. But don't forget the Credit Default Swap. This little guy allowed banks to guarantee to each other all kinds of really bad instruments without adhering to normal insurance regulations. While all the crack addicts were riding up on the bubble, everything was covered with cheap promises.

    Or in short, everyone was building a house of cards on nothing but promise that the future would be even better. Mix in the things you just talked about and suddenly you find there is no foundation.

    Credit Default Swaps should have been regulated. In fact, if you read Time Magazine last March, you would have been able to predict it.
     
  13. B_starinvestor

    B_starinvestor New Member

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    Agreed. CDS's were the straw that broke Wall Street.

    Although, I'm not sure how you could regulate them....aside from simply banning them. The swaps are useful hedges in a [normal] credit market. In most bursting bubbles, there are fatalities like the swaps I suppose.
     
  14. curious n str8

    curious n str8 New Member

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    So what do you suggest we do about this? Redistribute their weath?
     
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