10 replies to this topic

[TTHQ Staff]

Greenspan speech : "We've seen this turmoil before"

"The human race has never found a way to confront bubbles," Former Federal Reserve Chairman Alan Greenspan said Thursday in reference to the euphoria that can precede contractions, or reactions, like the current market turmoil, according to a published report.

Greenspan, speaking to economists in Washington, D.C., compared the turmoil to that of 1987 and in 1998, when the giant hedge fund Long-Term Capital Management nearly collapsed, The Wall Street Journal reported on its Web site.

"The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987, I suspect what we saw in the land-boom collapse of 1837 and certainly [the bank panic of] 1907"

Greenspan, now a private consultant, said euphoria takes over when the economy is expanding and leads to bubbles, "and these bubbles cannot be defused until the fever breaks."

Bubbles can't be defused through incremental adjustments in interest rates, he suggested. The Fed doubled interest rates in 1994-95, and "stopped the nascent stock-market boom," but when stopped, stocks took off again. "We tried to do it again in 1997," when the Fed raised rates a quarter of a percentage point, and "the same phenomenon occurred."

[Mtrader]

He created so he knows it so well.

Edited by Mtrader, 07 September 2007 - 09:07 AM.

[Jnavin]

Wasn't it Alan Greenspan who advised home buyers that adjustable rate mortgages would be a good idea?

[mike123]

He is trying not to take the blame by saying FED interate rate increase will not stop bubbles from forming.

[NAV]

Wasn't it Alan Greenspan who advised home buyers that adjustable rate mortgages would be a good idea?

LOL, i was thinking the same. What a hypocrite ?



And wasn't it him who repeatedly assured that all was well in the housing sector, before the house comitees?

Edited by NAV, 07 September 2007 - 09:24 AM.

[bullshort]

Greenspan speech : "We've seen this turmoil before"

Greenspan, now a private consultant, said euphoria takes over when the economy is expanding and leads to bubbles, "and these bubbles cannot be defused until the fever breaks."

I know there are many around here who defend Dr. Greenspan, and many more in the halls of Congress, but IMHO when history is finally written with the benefit of hindsight, this clown will be at the center of blame, and rightfully so, for the currency and economic disaster that lies squarely in the path this country is on. Accordingly, I don't find anything amusing in the above quotes from the esteemed Dr. Greenspan. Okay, now tell me to lighten up.

[EntropyModel]

Everything from Greenspan in the media serves the agenda of the 'Politico-media-corperate complex' (PMC). The benevolent interpretation is like when your 3 year kids asks if Santa is coming, most think it unkind to spoil the idea of a bit of magic and imagination by saying 'Santa....nah...its all a lie'....likewise PMC believe the masses are happier with lies, and the lie's are happily believed in general, forming the PMC matrix . The dark interpretation is like when your 7-10 year kid asks if Santa is real, and because you use the threat of 'Santa won't come if your bad' to control your kids behaviour, you go to extreme lengths to prove Santa IS REAL, fearing the loss of control. Oh and in the PMC matrix, Santa is the FED. Mark.

Edited by entropy, 07 September 2007 - 12:28 PM.

[mss]

Everything from Greenspan in the media serves the agenda of the 'Politico-media-corperate complex' (PMC).
Mark.

I'm so sorry, I thought it was "Politico-media-corperate symptom" (P-M-S)

[EntropyModel]

Everything from Greenspan in the media serves the agenda of the 'Politico-media-corperate complex' (PMC).
Mark.

I'm so sorry, I thought it was "Politico-media-corperate symptom" (P-M-S)

...I guess that's right mss, it sure makes alot of folks irritable...I find

eating alot of dark chocalate helps...with everything infact.



Mark.

[stocks]

Long ago, economist Ludwig Von Mises pointed out that bank credit expansion orchestrated by the Fed leads to what Von Mises called malinvestment. Ultimately malinvestment has to be liquidated. Further credit expansion can only postpone - but not prevent - the liquidation stage of the business cycle. In other words, Fed credit expansion led to the manic run-up in housing prices and has only postponed - but can not eliminate - the liquidation stage of the business cycle.

Von Mises has written that, “There is no means of avoiding the final collapse of a boom brought about by credit expansion.” To human beings who are blinded by the collective arrogance that comes from believing that they can control the uncontrollable, Von Mises’ statement may seem like narrow-minded folly.

When this economic cycle turns, the blame and recriminations will be enormous. Many believe that they are living a life-style has been well-earned and well-deserved. In some cases it has been, but in many cases it has been financed by a mountain of debt and subsidies. This won’t stop the blame. The blame will be absurd for, as has been observed, “blame is the act of accusing the mirror for the content of the reflection.”

In other words, the hubris of politicians and Fed chairmen is only a reflection of our own hubris. As a society we have collectively spent beyond our means and have had the arrogance to believe that there will never be any consequences. For now we continue to live under the illusion that the “best of both worlds” can continue indefinitely.

http://givingupcontr.../malinvestment/