tag:blogger.com,1999:blog-11719208.post614446620382278831..comments2023-11-05T04:36:14.223-08:00Comments on The Mess That Greenspan Made: Alan Greenspan explains the roots of the mortgage crisisTimhttp://www.blogger.com/profile/16530974968126497397noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-11719208.post-59486458544746969492007-12-13T03:11:00.000-08:002007-12-13T03:11:00.000-08:00I'm inclined to agree with the statement made by T...I'm inclined to agree with the statement made by Tim. The FED must live in their own bubble if they didn't see the housing bubble coming a mile away. It was apparent in 2004! <BR/><BR/>I'd also agree with PFT regarding regulation. Having worked in the housing sector during the duration of the bubble, we all sat in wonder about how, what we 'affectionately' referred to as "liar loans", were ever approved. Maids in Miami were buying $1M properties, hair dressers in Sacramento were buying $700k homes; some of them were even investment properties! <BR/><BR/>As much as I wish there were a level playing field in the wealth game, there is not. Anyone looking at the market and seeing maids buy up investment condos in bulk had to know there was something irreparably broken in the market.<BR/><BR/>Many people need to go to jail over this mess! Whether it be for for outright mortgage fraud, insider trading, or what we all know was false statements regarding risk and losses, there needs to be a precedent set that clearly states that it's not okay to make foolish "business decisions" that risk massive national and global economic melt downs.<BR/><BR/>I hope the Countrywide CEO is nervous!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-66325679878852944702007-12-12T16:21:00.000-08:002007-12-12T16:21:00.000-08:00Well, Greenspan was authorized and indeed instruct...Well, Greenspan was authorized and indeed instructed by Congress to take action on predatory lending practices with the 1994 Home Equity and Ownership Protection Act. He punted.<BR/><BR/>The Glass-Steagall Act of 1993 was repealed in 1999 with the Gramm-L-B Act. Gramm as the sponsor went on to join UBS which did very well with the securitized sub-prime mortgages the repeal facilitated.<BR/><BR/>Curious that the bubble pops within a year of Paulson coming over from Goldman Sach, the one firm that was shorting the sub-prime mortgage securities. Goldman Sach made a killing on the recent crash.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-50974056420150808232007-12-12T15:45:00.000-08:002007-12-12T15:45:00.000-08:00Mr. Greenspan,1) You explicitly encouraged “risky”...Mr. Greenspan,<BR/>1) You explicitly encouraged “risky” ARMs.<BR/>2) You say you raised interest rates but the long rate did not rise. And so it is not your fault. The issue here is nuanced.<BR/>Your policy of completely telegraphed 25bp interest rate increases meant the fixed income market was on the “one and done” bandwagon from 2004-2006. You knew that the forward term premium was getting destroyed by the policy and did nothing about it. You are also responsible for completely convincing the fixed income market that the fed policy is disjointed from commodity prices. And the misguided PCE core price deflator. And that energy and food prices don’t matter. These combined assured the market that there is NO inflation premium anymore in the fixed income market. Is there any surprise that the 10 yr yield never exceeded Fed funds above 4.5%? Give me a break. Your superficial analysis of interest rates only serves to shirk responsibility and belittles your own intelligence.Anonymousnoreply@blogger.com