Comments on: Greenspan’s error A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: breezinthru Mon, 22 Mar 2010 04:08:12 +0000 The Fed did indeed realize the impending doom facing the economy, as did the American Congress.

That is precisely why after decades of no significant changes in bankruptcy law at the federal level, Congress enacted sweeping changes that benefitted the lender a couple years before the economy collapsed.

By: Ghandiolfini Sun, 21 Mar 2010 11:51:55 +0000 That’s very funny H(S)BC.

silliness, don’t confuse hedging with gambling.

badsha, are you sure that the ‘proxy war killed millions of innocent people in Iraq’ ? It sounds a bit high, maybe it unleas(h)ed millions of barrels of crude oil per day. Your article is good, it just requires a spell check and counter arguments, remember, a debate has 2 sides to it. Remember the first law of physics ? Every reaction must have an equal and opposite reaction. It applies to economics too, that’s what the traders thrive on, its all about information and timing and staying awake a bit longer.

Greenspan’s gravest error is that he looks like Woody Allen.

By: badsha Sat, 20 Mar 2010 10:17:18 +0000 Greenspan was good atleast in one thing, picking up difficult words from dictionary and using them in front of Senate Banking Committe. ^ irrational exuberance^.

One thing baffles me even after eight years ^ why on earth did Fed, Greenspan and other central banks panicked after Sept 11.
Though it was a very tragic day lots of life were lost, but it was not the end of US economy. The Us economy was not dependent on two high rise towers, the destruction of the two towers panicked the old man, and he started cutting interest rates to zero. All the central bankers were very happy that they saved the Stock Markets.
How long and how much you could help inflate the assets?
From World war 1 to Kuwait war in 1991 the highest S&P 500 has gone was 330. It took 73 years for S&P 500 to reach 330 points. Then after 1991 to March 2000 S&P moved to 1574 ie it took 9 years to add another 1250 points.
On one side you have 73 years and 330 points and on another side you have 9 years and 1250 points, What was fed doing when assets were inflating at such a tremendous pace, just watching and saying irrational exubereance. That was not enough.

Again after sep 11 when the stock mkt S&P 500 dropped from 1574 to 860, the zero interest rates again helped the assets to inflate , and the S&P went up from 860 to 1586 in october 2007.

In my view the Greenspan Fed did more damage to US economy in particular and the world economy in general than the 9/11.

Then came George Bush, who was made a president and given an agenda by hook or crook take the oil prices up, the Texas oil companies advantage.
He complied with the agenda given to him. He went to proxy war killed millions of innocent people in Iraq then went to Afghanistan to hunt one person and in that process also killed 100s of thousands innocent people.
The crude prices were going up and up.
Not only war was used for taking the crude up, but the Bush administration did their best and succeeded in killing the US $. What benifit was there to kill the US $, the answer is it will ignite inflation, and when inflation is going up crude prices will go up and up as per the agenda.
THe white house spokesman used to make a comment every week, whenever the US $ was about to move up, the comment was ^ We want strong $, Strong $ is in our interest but let the Market decide. But let the Market decide phrase was used as a signal to sell Us $. The moment this comment was made the US $ was hammered down.
In my 30 years of financial mkts experience I have never seen White house spokesman giving comments on US $ every week, every now and then, with a hidden message.

So george Bush was successful in taking the oil prices higher by 1) making an illegal war,2) by killing the Us $
3) By smartly selecting Bernanke as White House adviser, then making him the Fed Chairman. Ben bernanke has the reputation of a person who is paranoid of deflation, unfortunately Bernanke has researched about japanese deflation spiral. Soon after Bernankes confirmation by Senate in late 2005, Gold, crude and other commodities skyrocketed, taking the CRB to super high values, which in turn created an unnatural phenomenon of price spiral,
real estate prices, land prices,rents of apartments, school fees, college and university fees, rice, crude, sugar, edible oils shot up. from early 2006 when Bernanke took over as Fed chairman till Aug 2008( LEHMAN BROTHErS) it was a choaos of unprecedented historical proportion, it was a limitless moves higher and higher.
We should be happy that Lehman brothers demise brought to an end that maniac price rises temporarily. But with the Feds 0 interest rate stance for extended period, things are again moving into chaotic direction.

A combination of Greenspan(doveish), who did not believe in proAction, George Bush the president with a hidden agenda, Ben bernanke a person studied japenese deflation and became a paranoid man, did not bode well for world economy and for humanity.

By: silliness Sat, 20 Mar 2010 10:00:02 +0000 It’s funny – all the Libertarians who hate the Fed should have loved that Greenspan stood by and did nothing to stop the bubble.

The blame game on our financial crisis is incoherent. The Fed controls too much or not enough? We need derivatives to help spread risk and add liquidity but they didn’t seem to help because no one understood what they were buying or they rigged. The expansion of credit for uwworthy individuals allowed us all to exploit the bubble, but we all could have (and should have) said “no thanks”.

Mr. Salmon can explain and justify the arcane details of swaps and derivatives all he wants, but can he refute the assertion that none of it worked to efficiently allocate capital and risk? Isn’t it all just a tool to gamble and distort true financial performance beyond recognition? Why is that so important to us?

By: HBC Sat, 20 Mar 2010 02:32:29 +0000 Giving the Fed frictionless control is like giving a horde of junkies frictionless keys to Kabul. The taxpayer not only pay for their rehab, but gets hooked on their Methadone into the bargain.

By: Story_Burn Sat, 20 Mar 2010 01:52:49 +0000 Greenspan is a batty old man