She must feel crazy sometimes. Almost like a movie--"Am I going crazy here? Am I the only who sees what is going on here?"

For those who don't know, she frantically tried to tell Alan Greenspan that he had to control credit access and interest rates before the collapse in 2008.

http://harvardmagazine.com/2008/05/making-credit-safer-html

http://billmoyers.com/segment/flashback-elizabeth-warren-basically-predicts-the-great-recession/

I fear she will go a little crazy at some point; that being right for so long, about something so important---will lead to mind almost cracking. I hope not.

"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

Paul Krugman, 2002.

Remember "The New Economy"? particularly how new-fangled, computerized market analysis would do away with the old laws of economics altogether? That was the idea that guided US economic policy in the Clinton era.

Greenspan was a big proponent of the idea, although apparently he did at one point have his doubts. I don't know how much that ideology informed policy after the dotcom crash, and how much of it was just a desperate attempt to keep the US economy from tanking altogether, but the crisis was successfully weathered, or postponed until 2008...

Ayn Rand's Influence on Alan Greenspan
In The Age of Turbulence, Alan Greenspan describes the influence that Ayn Rand had on his intellectual development.

Ayn Rand became a stabilizing force in my life. It hadn't taken long for us to have a meeting of the minds -- mostly my mind meeting hers -- and in the fifties and early sixties I became a regular at the weekly gatherings at her apartment. She was a wholly original thinker, sharply analytical, strong-willed, highly principled, and very insistent on rationality as the highest value. In that regard, our values were congruent -- we agreed on the importance of mathematics and intellectual rigor.

But she had gone far beyond that, thinking more broadly than I had ever dared. She was a devoted Aristotelian -- the central idea being that there exists an objective reality that is separate from consciousness and capable of being known. Thus she called her philosophy objectivism. And she applied key tenets of Aristotelian ethics -- namely, that individuals have innate nobility and that the highest duty of every individual is to flourish by realizing that potential. Exploring ideas with her was a remarkable course in logic and epistemology. I was able to keep up with her most of the time.

Rand's Collective became my first social circle outside the university and the economics profession. I engaged in the all-night debates and wrote spirited commentary for her newsletter with the fervor of a young acolyte drawn to a whole new set of ideas. Like any new convert, I tended to frame the concepts in their starkest, simplest terms. Most everyone sees the simple outline of an idea before complexity and qualification set in. If we didn't, there would be nothing to qualify, nothing to learn. It was only as contradictions inherent in my new notions began to emerge that the fervor receded.

One contradiction I found particularly enlightening. According to objectivist precepts, taxation was immoral because it allowed for government appropriation of private property by force. Yet if taxation was wrong, how could you reliably finance the essential functions of government, including the protection of individuals' rights through police power? The Randian answer, that those who rationally saw the need for government would contribute voluntarily, was inadequate. People have free will; suppose they refused?

I still found the broader philosophy of unfettered market competition compelling, as I do to this day, but I reluctantly began to realize that if there were qualifications to my intellectual edifice, I couldn't argue that others should readily accept it. [...]

Ayn Rand and I remained close until she died in 1982, and I'm grateful for the influence she had on my life. I was intellectually limited until I met her. All of my work had been empirical and numbers-based, never values-oriented. I was a talented technician, but that was all. My logical positivism had discounted history and literature -- if you'd asked me whether Chaucer was worth reading, I'd have said, "Don't bother." Rand persuaded me to look at human beings, their values, how they work, what they do and why they do it, and how they think and why they think. This broadened my horizons far beyond the models of economics I'd learned. I began to study how societies form and how cultures behave, and to realize that economics and forecasting depend on such knowledge -- different cultures grow and create material wealth in profoundly different ways. All of this started for me with Ayn Rand. She introduced me to a vast realm from which I'd shut myself off.

From The Age of Turbulence, pp. 51-53. Omissions from the text are shown with bracketed ellipses. All other punctuation and spelling is from the original.

http://www.noblesoul.com/orc/bio/turbulence.html

>> ^ChaosEngine:

>> ^marbles:
Is this what passes for financial experts nowadays? Outside of Rickards, the rest are fucking dis-info tools.
The Ben Bernanke said gold isn't money. He also said in response to Why do people buy gold?: "As protection against of what we call tail risks: really, really bad outcomes". Bad outcomes like... destroying an economy by design?
Meanwhile, If Central Banks Believe in Paper Money Why Are They Loading Up On Gold?
Also former Federal Reserve Chairman Alan Greenspan disagrees with Bernanke. 2 years ago: "What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment". (This is when gold was around $1,000/ounce)
In 1971, gold was $35/ounce. Now it's $1700/ounce. So it only took 40 years for the dollar to lose 97% 98% (edit) of it's value against gold.
It doesn't take an idiot to understand that if you save a $100 bill and forty years later it only has the purchasing power of $3 $2--that something is seriously fucked up with our monetary system.
You don't like gold? No problem. Just get rid of the economic central planning and let there be competing currencies. Gold will ALWAYS win in a a free market.

Rubbish. Gold has nothing but perceived value. In real terms, it is useless. If the world economy completely destabilised tomorrow, gold would be worthless. It's time we started basing our economy on the the real cost of things, energy. Ultimately, everything has an energy cost. Today energy is cheap, mostly because of fossil fuels. When energy starts becoming much more expensive, that will be the single greatest economic change in history.


The US dollar has nothing but perceived value. In real terms, it is useless. If the world economy completely destabilized tomorrow, the US dollar would be worthless.

Gold has nothing but perceived value. In real terms, it is useless. If the world economy completely destabilized tomorrow, gold would be worthless.

According to history, one of these statements is true, the other is laughably false.

So what do you measure you energy cost in?

>> ^marbles:

Is this what passes for financial experts nowadays? Outside of Rickards, the rest are fucking dis-info tools.
The Ben Bernanke said gold isn't money. He also said in response to Why do people buy gold?: "As protection against of what we call tail risks: really, really bad outcomes". Bad outcomes like... destroying an economy by design?
Meanwhile, If Central Banks Believe in Paper Money Why Are They Loading Up On Gold?
Also former Federal Reserve Chairman Alan Greenspan disagrees with Bernanke. 2 years ago: "What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment". (This is when gold was around $1,000/ounce)
In 1971, gold was $35/ounce. Now it's $1700/ounce. So it only took 40 years for the dollar to lose 97% 98% (edit) of it's value against gold.
It doesn't take an idiot to understand that if you save a $100 bill and forty years later it only has the purchasing power of $3 $2--that something is seriously fucked up with our monetary system.
You don't like gold? No problem. Just get rid of the economic central planning and let there be competing currencies. Gold will ALWAYS win in a a free market.


Rubbish. Gold has nothing but perceived value. In real terms, it is useless. If the world economy completely destabilised tomorrow, gold would be worthless. It's time we started basing our economy on the the real cost of things, energy. Ultimately, everything has an energy cost. Today energy is cheap, mostly because of fossil fuels. When energy starts becoming much more expensive, that will be the single greatest economic change in history.

Is this what passes for financial experts nowadays? Outside of Rickards, the rest are fucking dis-info tools.

The Ben Bernanke said gold isn't money. He also said in response to Why do people buy gold?: "As protection against of what we call tail risks: really, really bad outcomes". Bad outcomes like... destroying an economy by design?

Meanwhile, If Central Banks Believe in Paper Money Why Are They Loading Up On Gold?

Also former Federal Reserve Chairman Alan Greenspan disagrees with Bernanke. 2 years ago: "What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment". (This is when gold was around $1,000/ounce)

In 1971, gold was $35/ounce. Now it's $1700/ounce. So it only took 40 years for the dollar to lose 97% 98% (edit) of it's value against gold.

It doesn't take an idiot to understand that if you save a $100 bill and forty years later it only has the purchasing power of $3 $2--that something is seriously fucked up with our monetary system.

You don't like gold? No problem. Just get rid of the economic central planning and let there be competing currencies. Gold will ALWAYS win in a a free market.

@quantumushroom, Alan Greenspan now says all the Bush tax cuts should be allowed to expire.

*politics
*money

@blankfist, I'm kinda surprised at you. Perhaps you fell for the title, but here are some of the things Bill Black says:

1. Yes, [the bill's provision for running derivatives through a government-run exchange] is a good idea. You shouldn't be doing non-exchange traded derivatives, and this bill encourages exchange-traded derivatives. But it has loopholes that allow people to evade it, so it's probably not going to be terribly effective.
   
   Which is to say, the new regulations on derivatives are good, but they are too easy to circumvent.
   
   
2. What else do we know created perverse incentives? Professional compensation.
   
   
3. We know that the Goldmans of the world deliberately put the rating agencies in competition with each other in what in economics we call a "competition in laxity". In other words, whoever is willing to give the most absurdly inflated rating is who will get my business.
   
   Note: rating agencies are privately owned, for-profit companies.
   
   
4. So when we say the rating agencies screwed up, we don't mean that they took something that, you know, should've been a single-A and they call it a triple-A. No, we're talking about something that should have been 25 levels lower, and they called it AAA. If they're willing to do that, then they're going to be willing to bless the next insane thing, as long as the competition and laxity is allowed to exist.
   
   
5. Americans don't know that over 10 percent of all appraisers in America have signed a petition calling for the government to step in and regulate and enforce because of this Gresham's dynamic. A Gresham's dynamic is where cheaters and the least moral people prosper, and they drive the honest, moral people out of the marketplace. And that's what the appraisal industry was telling us. And the regulators refused to any do anything. And now, after a crisis measured in trillions of dollars of losses—and a trillion dollars is a thousand billion—we have, supposedly, the greatest reform bill since the Great Depression, and it completely ignores this causality.
   
   
6. The consumer bill was the other thing you asked me about. That is a good thing. But you can tell somebody has a really malicious sense of humor, because they put the new consumer agency into the Federal Reserve—the leading opponent of protecting consumers. This is the agency that under the HOEPA law [Home Ownership and Equity Protection Act], which goes way back to the '90s, had unique authority to protect us from otherwise unregulated mortgage bankers and anyone else who made mortgage loans. And even board members at the Federal Reserve went to Alan Greenspan and asked him to take action against these enormous abuses in the liar's loans and subprime, and Greenspan refused to act.
   
   This probably got your juices flowing, since it places some blame on the Fed. Unfortunately, it places blame on the Fed for refusing to regulate. Oh, and it was Republicans who insisted that the consumer protection agency be housed at the Fed.
   
   
7. So [in the subprime lending market] we had the exact opposite of what economics predicts: both parties to the transaction were made worse off. Well, why? Because the agents were made better off. Who were the winners? The rating agencies, the senior officers who walked away rich, the least moral appraisers, the least moral of the outside auditors at the big accounting firms. They were all the winners. They got rich by betraying their responsibilities. And so if you had had an Elizabeth Warren and if she had banned this nonprime product to protect consumers, now, that would enormously reduce this financial crisis.
   

In all, he's making all the usual liberal criticisms of the bill, which is that the bill's new regulations aren't nearly tough enough; which itself is based on the premise that unchecked greed and dishonesty was the root cause of the crisis.

Oh, and @marinara it doesn't "ensure Wall Street Scams keep running", a fair representation of his comments would be "doesn't crack down on Wall Street Scams."

>> ^blankfist:

It can't be the fault of the banks AND the bad policies of the Federal Government and the Federal Reserve? Then, you sir, lose. Good day.


Sure it can, it just wasn't any of the specific things you listed, which is why "nobody" is talking about them.

Mostly the problem was that the SEC and the FRB weren't enforcing the regulations they were tasked with regulating, because the highly-ideological political appointees at the top of both believed that the invisible hand of the market would lead banks to regulate themselves.

Alan Greenspan admitted later that he was wrong to think that.

He is right and wrong, this looks at actions after and not actions before that lead to a crisis like this.

Hudson claims fault with the government bailouts, yes a bailout by the US government is always a bad idea, but one must understand the root cause of why such an action took place, CDOs and subprime exposures were intertwined in complex financial instruments that exposed all the banks, Lehman had so much debt that no one wanted to touch it neither the US nor the UK government, Barclay's walked on buying it because no government wanted to under write it. After Lehman collapsed it spiraled confidence downwards in all sectors of the financial market. Government money and bailout was then needed to reignite confidence and loosen money and start allow interbank loaning to take place. If this didn't happen we would have been in a far worse position, is there problems with other incentives the government took? yes but one must understand the pressure induced by both the populace and economic interests to take all and any action, most of which was to shore up confidence in the financial sector.

How did this come about? the financial sector and believers like Alan Greenspan always believed that the financial market could always self regulate themselves to not taken actions that would lead to their own demise, CDOS and subprime packages actually evolved from greed and abnormal profits. This lead to a whole slew of deregulated financial instruments like NINJA loans, which allowed firms to give loans to people no have No Income No Job or Assets. Who would have prevented this? the SEC and Fed which were both pushed into taking more lenient positions with regards to financial markets (same thing happened before with junk bonds and derivatives).

But great sift indeed, I totally agree with his views on dissuading borrowing and creation of more debt. Financial markets do not produce wealth. They only transfer it. Old school investment doesn't occur, as its multinational and money doesn't have incentive to invest in the US then say China.

The really simplified version - Alan Greenspan did it.

An AP report from October 2008 - Badgered by lawmakers, former Federal Reserve Chairman Alan Greenspan denied the nation's economic crisis was his fault on Thursday but conceded the meltdown had revealed a flaw in a lifetime of economic thinking.



From 2007. Alan Greenspan forecasting the economies state and the credit crunch problems, upon creation of Greenspan Associates.

Ahh Right Wing historical revisionism.

Never looking at Reagen's record expenditure on nuclear armament, star wars, iran contra, trickle down economics and so much more. How was that as a economic stimulus?

Let's not forget the constant axiom held that free markets would allows a growing market, well insider trading of sub prime mortgages was about as close to a free market as you got, yet look how that panned out. The SEC and Credit approves all rolled over to allow big business to fuck up even more, which was then rescued by government bailout. Free market engineering allowed Enron to jack California for money over power, because somehow Alan Greenspan thought everyone would simply self regulate themselves.

What about defense spending? privatization of military contracts and logistics was supposed to save the government money instead it spends even more now on logistics and upkeep routinely private firms would blow up equipment and charge ungodly rates to the government.

Right wing nut economics has always been about privatizing profits while socializing the costs. Relying solely on outdated criticisms on FDR and LBJ. What happened with Bush you guys? What was that about small government?

No you can't afford tax cuts when you have run away deficit and a crumbling infrastructure. The same ones built through government expenditure.

First Obama was a Muslim, and now he's a Jew? What's next? Maybe he'll be a Scandinavian lacrosse player named Bjørn?

>> ^solvent:
There is nothing surprising about this. Alan Greenspan (ex-chairman of the Federal Reserve) is a jew and he was shaping the American monetary policy for years. The next president Obama is - contrary to popular belief - also a jew. They are occupying very important positions in the government, the financial sector and other key industries as well. Of course they will do anything to stop anti-zionist activity. These are fact, not a racist rant...

There is nothing surprising about this. Alan Greenspan (ex-chairman of the Federal Reserve) is a jew and he was shaping the American monetary policy for years. The next president Obama is - contrary to popular belief - also a jew. They are occupying very important positions in the government, the financial sector and other key industries as well. Of course they will do anything to stop anti-zionist activity. These are fact, not a racist rant...