http://www.reuters.com/article/ousiv/idUSTRE49M58W20081023 WASHINGTON (Reuters) - Former U.S. Federal Reserve Chairman Alan Greenspan told Congress on Thursday he is "shocked" at the breakdown in U.S. credit markets and that he sees more layoffs and a jump in unemployment ahead. Despite concerns he had in 2005 that risks were being underestimated, "this crisis, however, has turned out to be much broader than anything I could have imagined," Greenspan said in remarks prepared for delivery to the House of Representatives Committee on Oversight and Government Reform. "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief," he said. Banks and other financial institutions need public support, such as the recently approved $700 billion bailout package, to avoid serious retrenchment, he added. Right... I think much of the problems we are seeing today - were all built up under the watch of Alan Greenspan. In fact he cheered the failed system, overspending and bubble on.
He also said, "derivatives are good... spreads the risk around".. and "y'all really missed the boat and wasted money for not having ARMS..." What a DICK!
Absolutely! Greenspan left the interest rates too low for too long. Banks were not making enough money off individual loans so thay started dealing in quanity instead of quality.
That also created a carry trade. And worse yet, the players thought they could lock in the spread and have their position "insured" with CDSs... So as it appeared there was no way to lose on the deal, they pushed the peddle to the metal on leverage. Except... the "insurance" was all based upon, "I can't pay you until my counterparty pays me". Probably will go down in history as the all-time house of cards... Oops...
Greenspan is a sociopath. I will never forget how he went on PBS and proclaimed that he supported Bush tax cuts because he was very afraid that the government would have no debt because of projected surpluses in 2000s and that the government would have to BUY PRIVATE property... To say something so obscenely false with a straight face requires a)lack of conscience b) complete contempt for the intellectual capacity of others.
He doesn't get it. He felt that self-regulation would work and that institutions protect their equity.They don't. People protect their equity! He ALSO got sucked into complacency and confused low wage and price inflation with NO EXCESSES! Big mistake.
He is lying. People in money and power are rarely shocked, and never shocked about money. Lying is politics, and he is a politician. Whodathunkit.
The total off the wall conspiracy theorist in me sometimes wonders if the government knows the future through remote viewing and they needed the bubble to develop the internet and collect the knowledge we will need to rebuild. You know, Isaac Asimov type stuff