Free Republic

Some people don’t like the concept of blame. They view it as useless because it wastes time in looking for a solution. I will tell you differently. Blame is useful because it identifies offenders, which is the first step in eliminating the problem. The trouble is that few have the stomach to get rid of the offenders. So, as I traveled home from prayer meeting with my children last night, we listened to a radio show discussing the current credit crisis. This was a good discussion, unlike many that I hear. But the discussion (on NPR) eventually focused on “who...

“Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.” — Alan Greenspan in 2004 George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.” And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially...

When credit markets seize up, when financial instruments disintegrate, when the dollar fails -- it's not because Alan Greenspan was not sufficiently omniscient. He wasn't, true. But no one ever was. No one ever could be.If capitalism depends on designating a person of godlike abilities to manage demand and supply for all forms of money and credit -- currency, demand deposits, money-market funds, repurchase agreements, equities, mortgages, corporate debt -- we are as doomed as those wretched citizens who relied on central planning for their economic salvation

It’s been raised as a possibility and was even dismissed by former President Bill Clinton, however Senate Majority Whip Richard Durbin, D-Ill., said former Federal Reserve Chairman Alan Greenspan is partially at fault for the current economic crisis. According to Durbin, speaking at the Center for American Progress Headquarters in Washington, D.C. on Sept. 26, said it was Greenspan’s support of the 2001 Bush tax cuts and his reluctance to use regulatory authority to slow down subprime lending. “I can’t stand here in defense of Alan Greenspan,” Durbin said. “He was also the man who rationalized the Bush tax cuts...

It is now consensus that Fannie Mae and Freddie Mac are at the heart of the systemic meltdown we are seeing in the mortgage market. They are costing taxpayers billions through their own bailouts and through the role they played in fueling an artificial mortgage boom.But eight years ago, when I testified before Congress that Fannie Mae and Freddie Mac's "special privileges create a serious hazard to the market, to taxpayers (and) to the economy," my criticism of these sacred financial entities was met with ridicule. At the hearing on June 21, 2000, before the House Financial Services Committee, I...

Whatever we do, it will be wrong It's time to start thinking about digging out from this crumbled financial house of cards. With heaps of blame to go around, it's clear that past policies won't help. By Bill Fleckenstein This is one of the most extraordinary periods in U.S. financial history. Given the widespread recounting of the details, what I would like to focus on instead are the major takeaways. The first is something I began writing about in June 2007, that we had crossed over from "too big to fail" to "too big to bail out." A house of...

When Sen. Chris Dodd (D-CT) gavels in the Senate Banking Cmte., he is expected to pro- pose changes to the Bush admin.'s $700 billion intervention in the financial markets. Witnesses include Sec. of Treasury Henry Paulson; Ben Bernanke, Chair of the Federal Reserve System; and others

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense - perhaps more clearly and subtly than many consistent defenders of laissez-faire - that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other. In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Back in 2002, when his reputation as “The Man Who Saved the World” was at its peak, Alan Greenspan, former chairman of the Federal Reserve, came to Britain to pick up his knighthood. His biggest fan, Gordon Brown, now the UK prime minister, had ensured that the citation said it was being awarded for promoting “economic stability”. During his trip, Mr Greenspan visited the Bank of England’s monetary policy committee. He told them the US financial system had been resilient amid the bursting of the internet bubble. Share prices had halved and there had been massive bond defaults, but no...

Barney Frank just threw Alan Greenspan under the bus. Frank essentially states that if only Alan Greenspan had taken the authority given to him back in 1994, and exercised it like Ben Bernanke did in 2006 we wouldn't have the mess we have today. Yes, you read that right - Barney Frank said the Clinton Fed Chair Greenspan screwed up, and the Bush Fed Chair did things right. In other news, snow is reported to be falling in Hell; Lucifer is perplexed!

Democrats and the MSM are pointing to John McCain's vote for the Financial Services Modernization Act of 1999 (S. 900, Gramm-Leach-Bliley) as evidence that he contributed to the recent financial collapse of Lehman Brothers, AIG, et. al. The truth is that Alan Greenspan, then Chairman of the Federal Reserve Board, and Donna Tanoue, then Chairman of the FDIC, not only supported the legislation but testified in front of the Senate Committee that the legislation was essential for economic growth and absolutely necessary. Read the Senate Committee Report at http://thomas.loc.gov/cgi-bin/cpquery/?&dbname=cp106&sid=cp1064MJzX&refer=&r_n=sr044.106&item=&sel=TOC_12543& President Clinton signed the bill into law on November 12, 1999....

The People Responsible for Fannie Mae and Freddie Mac By Bill Mann, Seth Jayson, Tim Hanson, Nate Weisshaar and Keith Beverly September 10, 2008 Comment (33) Recommend (91) It was a wise man who noted that the only corporate structure more insidious than a government-sponsored monopoly is a government-sponsored and investor-owned monopoly. In the end, as Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have now so painfully proved, trying to serve the master of public policy while generating returns for investors will lead to disaster. Fannie and Freddie collapsed because they were part and parcel of the widespread...

The United States is mired in a "once-in-a century" financial crisis which is now more than likely to spark a recession, former Federal Reserve chief Alan Greenspan said Sunday. The talismanic ex-central banker said that the crisis was the worst he had seen in his career, still had a long way to go and would continue to effect home prices in the United States. "First of all, let's recognize that this is a once-in-a-half-century, probably once-in-a-century type of event," Greenspan said on ABC's "This Week." Asked whether the crisis, which has seen the US government step in to bail out...

WASHINGTON - Alan Greenspan says the country can't afford tax cuts of the magnitude proposed by Republican presidential contender John McCain — at least not without a corresponding reduction in government spending. "Unless we cut spending, no," the former Federal Reserve chairman said Friday when asked McCain's proposed tax cuts, pegged in some estimates at $3.3 trillion. "I'm not in favor of financing tax cuts with borrowed money," Greenspan said during an interview with Bloomberg Television. "I always have tied tax cuts to spending."

CHICAGO (Reuters) - Presidential candidate Barack Obama's campaign on Saturday seized on comments from former Federal Reserve Chairman Alan Greenspan, who questioned the affordability of broad new tax cuts. Greenspan told Bloomberg News he was "not in favor of financing tax cuts with borrowed money" when asked if the United States could afford big tax cuts such as those proposed by Republican John McCain.

WASHINGTON – Alan Greenspan says the country can't afford tax cuts of the magnitude proposed by Republican presidential contender John McCain — at least not without a corresponding reduction in government spending. "Unless we cut spending, no," the former Federal Reserve chairman said Friday when asked about McCain's proposed tax cuts, pegged in some estimates at $3.3 trillion. "I'm not in favor of financing tax cuts with borrowed money," Greenspan said during an interview with Bloomberg Television. "I always have tied tax cuts to spending." McCain has said that he would offset his proposed cuts — including reducing the corporate...

The end of the superbubble That sound you hear is the popping of a financial bubble in housing, the economy and the market. And you can trace it all to Alan Greenspan's Federal Reserve. By Bill Fleckenstein Reading the papers, it's quite clear that the enormity of the problems facing Americans (and the world, for that matter) has emerged to the fore. Consequently, I decided a quick recap of our troubles might be useful. There is a budding realization that the housing bubble's collapse will be more difficult than the masses and Wall Street had believed. You could see this...

Greenspan sees Fed getting tough on inflation By Chris Aspin and Jason Lange Fri Jun 13, 5:06 PM ET Former U.S. Federal Reserve Chairman Alan Greenspan said on Friday the Fed will have to tighten monetary policy to put a brake on inflation, adding that the worst of the credit crisis may have passed. Growing price pressures have led the U.S. central bank to recently shift to more aggressive anti-inflation rhetoric, and expectations are rising that policymakers will raise benchmark U.S. interest rates within months. "If you're going to keep inflation rates down ... the Federal Reserve is going to...

No bear wants to be a perma-pessimist, ever waiting for the sky to fall. So, sunk in a deep armchair with an optimistic bottle of Rioja (Baron De Ley Reserva), I have tried to tot up reasons why the great credit smash-up of 2007-2008 may now be safely over, heralding sunlit uplands once again. 1) Ben Bernanke has carried out the most dramatic rescue since the creation of the US Federal Reserve. His emergency rate cuts - 125 basis points over eight days in January - was a "game changer", as they say in London’s American Quarter, Canary Wharf. By...

This is a from column called Taking Stock by Malcolm Berko where he responds to questions concerning finances: Dear Mr. Berko: I began taking Social Security at 62 and will be 70 in a few months. I wish I had waited until age 70 to collect my benefits, which would have been almost twice as much as I’m getting now. Several years ago I heard, and I can’t recall where, that I can reapply to the Social Security Administration and get higher benefits as if I had waited until I was 70. Can you verify this, and if this is...

Economy: Ex-Fed chief Alan Greenspan has spent the past few weeks denying he deserves blame for the housing crisis. Sorry, maestro, you do deserve some blame — but not for the reasons people think.Greenspan left office on Jan. 31, 2006, amid much praise. Indeed, he mostly did a fine job as the nation's top banker for 18 1/2 years. But his last seven years were rocky and marred by errors — errors that helped create a record stock market crash and a subsequent tailspin in the housing market that we're still trying to clean up. Writing recently in the Financial...

Alan Greenspan may be correct that a glut of global saving pumped up the housing bubble by keeping long-term interest rates low. If so, then watch out, because the situation has gotten worse: Foreign stockpiles of U.S. dollars are fatter and interest rates lower than at housing's zenith in 2005. Global central-bank reserves surged to a record $6.4 trillion in the fourth quarter of 2007, according to the International Monetary Fund, up from about $4 trillion in 2005. Those reserves are pouring into U.S. Treasury bonds for safekeeping. Foreigners held $2.32 trillion in Treasurys in the fourth quarter, compared with...

NEW YORK (MarketWatch) -- Former Federal Reserve Chairman Alan Greenspan has endorsed Republican Sen. John McCain for president, according to Reuters, which cited an interview in El País published Sunday.

Those blindsided by the recent financial meltdown are now loudly blaming the free market for its failure to police its own excesses, and are calling for greater regulation to prevent future disasters. But for those who clearly observed the problems developing (in high definition slow motion) the blame can be directed squarely at the policies of the Greenspan/Bernanke Federal Reserve. As has been the case countless times in history, the free market will now pay the price for government incompetence.In Senate hearings this week, all parties involved completely ignored the Fed's own culpability in igniting the speculative fever. It's as...

There is more than a 50 percent chance the United States could go into recession, former Federal Reserve chairman Alan Greenspan told El Pais newspaper in an interview published on Sunday. However, the U.S. has not yet entered recessionary state marked by sharp falls in orders, strong rises in unemployment and intensive weakening of the economy, he said. The economy has become increasingly important in the U.S. presidential campaign, topping the list of voters' concerns heading into the November election. Greenspan, the U.S. Fed chairman from 1987 to 2006, endorsed the Republican presidential candidate John McCain in the interview. "I'm...

[snipped] Could tightened regulation of subprimes have contained some of the reprehensible, and presumably criminal, acts of lenders? Probably. But the broader crisis would likely have arisen even with increased micro-surveillance. The core of the subprime problem lies with the misjudgments of the investment community. Subprime did not break from its localized niche status until 2005. As Ben Bernanke recently put it: “The deterioration in underwriting standards …appears to have begun in late 2005.” I assume that judgment reflected the increased delinquency behavior that is now evident for loans initiated in late 2005 and subsequently. Subprime securitization exploded because subprime...

Auerbach, portrays Greenspan as a real-life Professor Marvel -- who, through double-talk or "garblement," transformed himself into a mighty economic wizard à la Oz. Auerbach strongly implies that Greenspan's 1977 Ph.D. from New York University was obtained in a few months with little more rigor than a matchbook-cover art degree and that Greenspan has kept his Ph.D. thesis secret in order to protect his vaunted academic reputation. Although Auerbach's evidence is circumstantial, it certainly is provocative. For years, NYU told the public that, at Greenspan's request, the thesis was locked away from public view in a vault at its Bobst...

Today's economic condition could likely be seen as "the most wrenching since the end of the second world war," wrote former Federal Reserve chairman Alan Greenspan in the Financial Times on Monday.

How a Bubble Stayed Under the Radar By ROBERT J. SHILLER ONE great puzzle about the recent housing bubble is why even most experts didn’t recognize the bubble as it was forming. Alan Greenspan, a very serious student of the markets, didn’t see it, and, moreover, he didn’t see the stock market bubble of the 1990s, either. In his 2007 autobiography, “The Age of Turbulence: Adventures in a New World,” he talks at some length about his suspicions in the 1990s that there was irrational exuberance in the stock market. But in the end, he says, he just couldn’t figure...

The Gulf states' dollar pegs restrict their ability to draw out monetary policy suiting domestic economic condition, independent of the US policy stance, the former FOMC Chairman Alan Greenspan said Monday in Jeddah, Saudi Arabia. Most gulf states are experiencing record high of inflation, with Qatar reporting a 14% surge last year, followed by the UAE, Kuwait and other countries. Saudi Arabia's inflation hit a twenty seven year high of 7% in January, while UAE's inflation topped 9.3% in nineteen years during the month. The regional inflation average hit 6.3% in 2007, compared to 0.3% in 2001, according to Merrill...

Greenspan: Recession chances '50% or better' Former Fed chairman, speaking at Houston conference, also promotes nuclear power and electric cars. By Steve Hargreaves, CNNMoney.com staff writer February 15 2008: 11:57 AM EST HOUSTON (CNNMoney.com) -- Former Federal Reserve Chairman Alan Greenspan said Thursday there's at least a 50% chance the United States will slip into recession, and that the storm clouds over the economy won't clear until home prices bottom out. Greenspan, speaking at the Cambridge Energy Research Associates' annual energy conference in Houston, said that what may derail the economy are tightening credit markets and a potential slowdown in...

BERLIN (AFP) - Former Federal Reserve chief Alan Greenspan cast doubt on the ability of the central bank to prevent a US recession in an interview to appear on Thursday. Greenspan told the German weekly Die Zeit that the Fed or political policies could "probably not" keep the world's biggest economy from sliding into recession, as financial markets widely expected the US central bank to cut its main lending rate. "The influences of the global economy today are stronger than almost any monetary or budgetary response," the German-language weekly quoted Greenspan as saying. Although he left the post of Fed...

Alan Greenspan’s confirmation hearing as Fed chairman has been addressed in two previous Whiskey & Gunpowder contributions (May 21, 2007 Help Wanted: A Leading Contrarian Indicator and July 20, 2007 Alan, We Hardly Knew Ye). The spotlight was on Greenspan. This time, the prophetic warnings of Senator Proxmire receive attention. The chairman of the Committee on Banking, Housing, and Urban Development expressed several concerns, the greatest of which was the trend towards the concentration in banking. In extracts below, Proxmire makes it plain he expects Greenspan will abet these tendencies. And while the chairman’s statements and questions are directed to...

The financial turmoil is like an elephant in a dark room By Martin WolfPublished: January 22 2008 20:02 | Last updated: January 22 2008 20:02 “I was gradually coming to believe that the US economy’s greatest strength was its resiliency – its ability to absorb disruptions and recover, often in ways and at a pace you’d never be able to predict, much less dictate.� Alan Greenspan, ‘The Age of Turbulence’. EDITOR’S CHOICE Economists’ forum - Nov-16 Every week, 50 of the world’s most influential economists discuss Martin Wolf’s articles on FT.com  We all hope that Mr Greenspan proves right...

Soros Fund Management has appointed a former BlackRock co-founder, who left last month to start his own fund, as its new chief investment officer. Keith Anderson stepped down as BlackRock’s chief investment officer for fixed income in December ostensibly to start his own fund. In his new role he will manage all investment activites at Soros Fund, according to a letter sent to Soros shareholders yesterday.

Wall Street, the losers in the collapse of the housing market are legion. The biggest winner looks to be John Paulson, a little-known hedge fund manager who smelled trouble two years ago. Now, in another twist in financial history, Mr. Paulson is retaining as an adviser a man some blame for helping feed the housing-market bubble by keeping interest rates so low: former Federal Reserve Chairman Alan Greenspan. Like many legendary market killings, from Warren Buffett's takeovers of small companies in the '70s to Wilbur Ross's steelmaker consolidation earlier this decade, Mr. Paulson's sprang from defying conventional wisdom. In early...

Former Federal Reserve Chairman Alan Greenspan is signing on as an adviser to hedge-fund firm Paulson & Co., which has profited handsomely from the collapse of that bubble. It is the third consulting contract Mr. Greenspan, 81 years old, has signed since leaving the Fed after 18 years as chairman in January 2006 and establishing his own company, Greenspan Associates. He reached similar agreements with Pacific Investment Management Co., which manages more than $700 billion mostly in fixed-income assets, and Germany's Deutsche Bank AG last year. His memoir, "The Age of Turbulence," was released in September and remains on the...

The former Federal Reserve chief now admits there is a housing bubble, yet he still refuses to take the blame he so richly deserves A debate is beginning to rage about where to lay blame for the mortgage mess: the lenders or the borrowers. In some cases, I'd point to the lenders; in others, the borrowers; and beyond that, a combination of both. [snip] That brings me to the champion-in-chief of derivatives and the man responsible for the lion's share of this debacle: Alan Greenspan. (He has been on my mind the past couple of months, as I have been...

Former Treasury Secretary Lawrence Summers, once a fiscal hawk among Clinton Democrats, said the government should consider a $50 billion to $75 billion tax-cut and spending package to stave off a deep recession. Mr. Summers, now a Harvard University professor and investment-fund manager, also urged the Federal Reserve to take more aggressive action to ensure that its rate cuts actually reduce consumers' interest charges and stimulate spending. "Insufficient action to contain recessionary forces has much more serious consequences than excessive action to contain recessionary forces," Mr. Summers said in an interview ahead of a speech today at the Brookings Institution....

NEW YORK (MarketWatch) -- U.S. stocks traded at their lowest in more than two weeks Monday, pulling back as Moody's Investors Services warned it could lower bond-insurer credit ratings because of subprime losses and as a former Federal Reserve chairman warned of the possibility of a recession.

WASHINGTON, Dec. 16 -- Former Federal Reserve Chairman Alan Greenspan said Sunday Democratic presidential contender John Edwards' economic proposals would hurt the U.S. middle class. Greenspan, speaking on ABC's "This Week with George Stephanopoulos," said Edwards, a former North Carolina senator, is correct that middle class economic growth is stagnating "but his remedies will make it worse, not better." Edwards has advocated a freeze on mortgage foreclosures and a rescue fund to help families out of their mortgage dilemmas. But Greenspan said it's important to help those people without affecting mortgage rates or affecting market structures. "Cash (from the government)...

The Talk Shows Sunday, December 16th, 2007 Guests to be interviewed today on major television talk shows: FOX NEWS SUNDAY (Fox Network): Former Sen. George Mitchell, D-Maine, author of a report on performance-enhancing drugs in baseball; Reps. Pete Hoekstra, R-Mich., and Jane Harman, D-Calif.; Ted Leonsis, owner of the National Hockey League's Washington Capitals. MEET THE PRESS (NBC): Former Gov. Mitt Romney, R-Mass. FACE THE NATION (CBS): Former Sen. Fred Thompson, R-Tenn., and Edwards. THIS WEEK (ABC): Former Sen. John Edwards, D-N.C.; former Federal Reserve Chairman Alan Greenspan.LATE EDITION (CNN) : Edwards; Sens. Joe Biden, D-Del., Kit Bond, R-Mo., and...

WASHINGTON (AP) -- Alan Greenspan, former chairman of the Federal Reserve, suggested Sunday that a tax break or other government financial help for homeowners facing the mortgage crunch would be the best political fix for the economy. He cautioned against meddling with home prices or interest rates to address the housing problem. Greenspan did not specifically call for a tax cut. Instead, he called for the government to apply money to the severe housing market slump. Such a cash infusion would typically come through a tax break or a new government spending program. "Cash is available and we should use...

Alan Greenspan's book The Age of Turbulence is one of the best business and finance books out at the moment and will be a welcome stocking filler for any student of politics and economics. Its pages have been devoured by legions of market followers seeking insight into past events and wise words about the future. Greenspan's US recession warning But one of the more worrying predictions from the former chairman of the Federal Reserve was not in the pages of his autobiography but came floating across the airwaves of American Public Radio. Greenspan has joined the rising chorus of influential...

Former Federal Reserve chairman Alan Greenspan believes the chances of the US economy sliding into recession now stand at 50-50, rather than the mere 30pc he estimated earlier this year. Mr Greenspan, who has continued to speak out on the state of the US economy since stepping down in 2006, made the comments during a speech played on National Public Radio. The former Fed chairman warned "We are getting close to stall speed... and we are far more vulnerable at levels where growth is so slow than we would be otherwise."

...Asked whether the economy will tip into a recession -- something that has not happened since 2001 -- Greenspan said, "It's too soon to say, but the odds are clearly rising." He said he felt this way because of the slowing pace of growth. "We are getting close to stall speed," he said. "We are far more vulnerable at levels where growth is so slow than we would be otherwise," he added. "Indeed, it's like someone who has an immune system that's not working very well is subject to all sorts of diseases and the economy at this lever of...

...The crisis was thus an accident waiting to happen. If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market. As I have noted elsewhere, history has not dealt kindly with protracted periods of low risk premiums. The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when the economic ruin of the Soviet Bloc was exposed with the fall of the Berlin Wall. Following these world-shaking events, market capitalism quietly, but rapidly, displaced much of the discredited...

On Aug. 9, 2007, and the days immediately following, financial markets in much of the world seized up. Virtually overnight the seemingly insatiable desire for financial risk came to an abrupt halt as the price of risk unexpectedly surged. Interest rates on a wide range of asset classes, especially interbank lending, asset-backed commercial paper and junk bonds, rose sharply relative to riskless U.S. Treasury securities. Over the past five years, risk had become increasingly underpriced as market euphoria, fostered by an unprecedented global growth rate, gained cumulative traction. The crisis was thus an accident waiting to happen. If it had...

By Reuters | 21 Oct 2007 | 05:23 PM ET Font size: An unusually high degree of risk taking across asset classes made recent financial market turmoil all but inevitable, former Federal Reserve Chairman Alan Greenspan said Sunday. "The financial crisis that erupted on August 9 was an accident waiting to happen," Greenspan said in a speech on the sidelines of the International Monetary Fund and World Bank meetings. "Credit spreads across all global asset classes had become suppressed to clearly unsustainable levels." "Something had to give," he said. "If the crisis had not been triggered by a mispricing of...

It was only last summer when stock markets plunged nearly 10 per cent, shocked by a sudden credit crunch emanating from the implosion of the American housing bubble. It seemed that the era of easy credit and ever-rising stocks had ended. Now, all this appears to be just an unpleasant memory. The Dow Jones industrial average has more than erased its earlier losses, closing well above a previous record set in July. Other major indexes are well on the way to recovery. With the Fed in easing mode, what could go wrong? Even dour old Alan Greenspan seemed on the...