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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 379.91+0.4%Nov 11 4:00 PM EST
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To: KyrosL who wrote (26749)12/23/2007 10:34:47 AM
From: carranza2  Read Replies (3) of 217689
 
Greenspan was making the recommendation when home values were extremely high and interest rates extremely low. A change in either meant trouble, as is now obvious, and should have been obvious to an experienced economist. That underwriting standards for ARMs were absurdly lax only exacerbated the problem we see now.

If you don't believe me, check out this 2004 article by Fleckenstein, who is no one's fool.

moneycentral.msn.com

A snippet, from 2004:

So the most irresponsible central banker in the history of the world created the biggest bubble in the history of the world, which had disastrous consequences for the stock market and the economy. In order to ameliorate that, he has created bubble-like conditions and absurd financing schemes in real estate. Meanwhile, we've seen an enormous concentration of risk develop inside the financial system: We are down to just a handful of big banks and government-sponsored entities that are using his other favorite toy, derivatives, to theoretically manage away all their risks.

Fed prudence takes a powder

The summation of these variables has only increased the risk of something bad happening. And, of course, that risk has been heightened by the tanking of the dollar. The dollars decline has been promoted by Greenspan's irresponsible policies and attempts to continually bail out his most recent mistake. He has been doing this serially since junk bonds and bad lending nearly took down the financial system at the end of the 1980s and wiped out the savings and loan industry in 1990-1991.
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