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Yes, Greenspan Did It
Stefan M.I. Karlsson
Lew Rockwell.com
Sunday, January 4, 2009
With no one denying the obvious fact that America is in a deep slump anymore, the discussion has instead shifted to why it happened. The Austrians (including me) who predicted these problems based on Greenspan’s low interest rate policy know of course that the main cause was that low interest rate policy, with his numerous bailouts of failed financial institutions also creating a moral hazard that encouraged risky behavior.
But non-Austrians who for various reasons seem determined to exonerate the central bank have instead offered various other explanations. I will not here answer them all, and will instead simply comment on the most common alternative explanations and the various arguments used explicitly for the purpose of exonerating Greenspan.
From the supply-side Republican establishment who until 2007 and in some cases well into 2008 denied the existence of any serious problems the blame is cast on Fannie Mae and Freddie Mac and the Community Reinvestment Act (CRA). Despite having been so wrong, they are closer to the truth than other deniers as the factors they blame did. Surely the fear of being accused of violating the CRA made some lenders more willing to lend to some low-income and minority households that really weren’t credit worthy. And surely, the role of Fannie and Freddie in buying up many of the mortgage-backed securities and then selling them on with their guarantees helped increase such lending.
But there is little reason to believe that either of those factors was more than something that aggravated slightly the crisis. After all, both Fannie & Freddie and the CRA had existed for decades without causing anything similar to this. And most sub-prime loans were issued by institutions not covered by the CRA, and the act itself isn’t really that draconian as it says that lenders aren’t compelled to make loans that are likely to be unprofitable. Similarly, lending not covered by Fannie & Freddie expanded rapidly too during the bubble.
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One argument that particularly left-wingers have advanced is that “deregulation” or “lack of regulation” is the cause of the problems. Rarely do they specify exactly what regulations they refer to. (I suspect that many simply have such great faith in government that there must be some lack of regulation that causes any problems. What regulation is unimportant to them) Often it is said that securitization, and lack of regulation of it after the repeal of the Glass-Steagall Act, is the problem.
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15 Responses to “Yes, Greenspan Did It”
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January 4th, 2009 at 7:51 am
Scapegoat!!!!!
January 4th, 2009 at 9:55 am
The World is in a DEPRESSION, not a deep slump and that includes the sickening American Yuppie. We believe that 2009 will be used to further ease the American into an acceptance of their new 3rd world status and the shocks will be held off a while, possibly a great while. The agenda underway is both shocking and subtle and they know just how to handle it. The average American will never be let off the hook, just made to be accepting of it. The next big step will be one American turning in another American.
L E V I A T H A N
January 4th, 2009 at 10:50 am
Sure the people that took the housing loans made a mistake in trusting the banks they should have never took the bankers promise that the sub-prime rates would remain low after the 2 year introductory offer ended. Known as predatory lending the banks suckered the would be home owners with a two year sub prime loan of 4% with a promise the low interest rate would remain low after the initial period, like a shark telling a swimmer jump in the water is fine.
The suckers jumped in and were eaten alive by the bankers. There 4% loans rocketed to 11%
and were billed for past discounts by the banking Hyenas. The lenders replied you can’t do this to me there are laws in this country against this type of banking. Sorry Charlie all the state consumer protection laws were revoked by the bush administration and the boy that was going to address congress on predatory lending got caught with his pants down and he’s now the ex-governor of New York state.
January 4th, 2009 at 11:13 am
Who would have guessed that a jew did it, just count them all.
January 4th, 2009 at 11:49 am
The (private) Federal Reserve has been destroying our economy since its inception, by design!!!
Hold Greenspan & the others accountable for high treason!!!
January 4th, 2009 at 8:12 pm
This website does a great job of exposing corruption, but everyone should stop making anti-Semitic remarks and calling for violence. This article by the Austrians is misleading people from the whole truth. How can one explain the global crisis and not even mention “mark to market” accounting or unregulated credit default swaps? Greenspan is guilty of assisting in setting up the house of cards, but Paulson is guilty of knocking them over by triggering payment on credit default swaps on 9/7/08, when he took over Fannie and Freddie. The collapse was orchestrated. The next week, down went Lehman, AIG and Merrill. And Paulson’s decision to allow Lehman to go under, triggered credit default swaps again-setting off a global panic. I predict there will be one last round of trouble on 4/19/09 then “they” will orchestrate the recovery. Since Freemasons started the American Revolution and Civil War, one has to wonder if the Austrians or IOUSA crowd are calling for revolution so they can create their own separate Ayn Rand country. Promote peace not revolution.
January 4th, 2009 at 9:43 pm
I wish we could truly hold them accountable. Unfortunately stupidity and greed are not crimes, but we can decide who gets built into the next stages of capitalism. Profit by SRI, not just yourself, but all. Click on the link and be a net creditor to the world.
January 4th, 2009 at 9:52 pm
umm somebody please remind the author od this document. Please tell the moron about the “commodities and futures modernization act of 2000″…therein lay the prima facie for the derivatives mess.
I abhor people who ignore reality, although, I reserve a certain disdain for hack journalists.
January 4th, 2009 at 9:53 pm
“od” = “of”
forgive the typo and please mr. rockwell, you could do a little better with your talent pool.
January 5th, 2009 at 2:27 am
Hey Leviathan, just thought you’d like to know something. They’ve been asking each other to turn each other in for years. There is one of those billboards near my home which encourages people to turn in people for rewards. And you can turn people in anonymously. You’ve seen them before, haven’t you? As for the “average” American, what can you expect but ‘average” results? Only the lash for the slaves. Funny thing is, there sure are a lot more slaves than masters. By a lot, I mean almost everyone. But, these “elites” don’t really control anyone. Why should they when we are so willing to control ourselves. By believing we are too weak, too powerless, and too afraid to be free.
January 5th, 2009 at 3:35 am
INFORMATION IS THE BEST WEAPON TO USE AGAINST THESE NEO-SCUM BASTARDS !!
IT’S TIME FOR ALL INFOWARRIORS TO STEP UP, STEP FORWARD, AND POLLUTE THE
WORLD WITH OUR COLLECTIVE KNOWLEDGE OF CONSCIOUSNESS. 1 LOVE !!!!!!!!!!!
TIME TO GIVE POWER BACK 2 THE PEOPLE, GIVEN BY THE PEOPLE, & GIVEN 4 THE PEOPLE
AND SO BEGINS THE REVOLUTION …………………………………………….
………”RON PAUL”……………………….”ALEX JONES”………………………….”DAVID ICKE”……….
…..FOR PRESIDENT…………….FOR VICE-PRESIDENT………….FOR SECRETARY-OF-STATE…..
January 5th, 2009 at 6:00 am
Rothschild and Windsor likes Greenspan. His soul is black like their own.
January 5th, 2009 at 8:43 am
It is all about one government, currency and religion. America you are up next so get ready for the north american union, rescue currency the amero and even fema camps run by homeland security. Do the research while time allows; go here please center for global research stevequayle.com uaff.us whatdoesitmean.com strangedaysstrangeskies book of enoch book rise of the fourth reich ronaldweinland.com alex jones prison planet infowars cuttingedgeministerires. Love to all, Annie excluding the demon, not elite biter illuminati who are on borrowed time…….
January 5th, 2009 at 9:05 am
I think “Greenspan’s low interest rate policy” caused or encouraged the credit bubble that burst and is now causing a lot of destruction.
Frankly why can’t we just follow Article 1, Section 10 of the U.S. Constitution? What is wrong with that?
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
If states are required to pay in “gold and silver Coin a Tender in Payment of Debts” should this not be the normal money of the U.S. and not these Federal Reserve Notes that are pieces of paper backed by nothing?
January 5th, 2009 at 10:35 am
Does anyone think they [controlling elite] didn’t really know what they were doing? If they had just been honest, if they had just used common sense like you and me, by being able to do things like balance a check book. It’s too hard to beleive they wern’t doing these things intentionally.
And what was their goal? Well many got rich, and now many of that same bunch are being rewarded with money borrowed on behalf of us chump tax payers.
The fix is in. Half our populace unwittingly chearleads this bunch. Try to protect your own ass, cause were all going down together.