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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (86952)	9/28/2008 10:11:17 AM
From: koan	Respond to of 116555

I do not think it was so much that the experts were wrong as much as it was the theory was wrong i.e. that pure capitalism does not need government oversight and can do no wrong as it is a self regulating mechanism. Greenspan, Ayn Rand and Milton Friedman's philosophy. Greenspan left fed funds rates too low (1%), for too long and Phil Gramm recinded the Glass Steagll act. There was a reason for the glass Steagall Act as you can see now. That was the act which saved the banks during the great depression. By the way Phil Gramm, IMO, is not only nuts but has a sociopathic personality. So now you have free money for unregulated banks. So the banks went hog wild lending money to anyone who could sign their name and everyone connected made a ton of money up front e.g. builders and specualtors were makign money hand over fist, realtor's makes a 6% commission, the bank originator made 1 to 3%, banks got points 1 to 5%, title companies made money and then the investment banks and hedge funds bundled up all the loans, often stripping out the good ones and sold them to large hedge funds as triple AAA rated securities that could not be quantified for value (mark to market)----greater fool theory.