Has Greenspan been discredited?

[Holst]

Companies are out to make as much money as they can legally do so (and sometimes illegally). Look at the derivatives market to see what an unregulated market looks like. And look how hard it collapsed, nearly taking down every major bank with it.

I'm not going to get into it because there's no real way to prove or disprove it, but myself and others believe that the crash wouldn't have had nearly as big of an effect if the market had simply been given time to recover. Many believe that FDR made the depression last way longer than it should have. As far as the crash itself goes, no economic system can prevent the ups and downs that all markets are bound to experience.

So you think things like insider trading is okay or stock pumping via misleading information? 1929 called and they would like to subscribe to your newsletter.

If you have less regulation then patronization of different companies would be dependent on the company's moral fiber. Companies wouldn't have to cheat the system in order to make a profit. If you think that less regulation would lead to more abuse, think about this: if you knew a company was cutting corners and stealing money from you, would you continue to go there? With less regulation comes more competition because people would be able to go into business for themselves without the hassle that starting a new business today entails, offering services which didn't include lying or stealing or any of the other problems that many modern companies experience.

 

[Moonbeam]

Greenspan's world view was completely wrong.

 

[Craig234]

As someone recently commented, Paul Volcker had brought inflation down from 11% to 3%. and that would normally get someone reappointed.

But there was a right-wing religion of dereguation spreading at the time, and Reagan wanted a deregulator, and so Reagan put Greenspan in instead.

Now Greenspan has admitted the ideologgy was wrong, Wall Street went from 15% to 40% of the economy and crashed it, and Paul Volcker is back advising the government. In short - yes.

 

[Tsavo]

Greenspan's world view was completely wrong.

It's impossible to formulate an accurate view of the world when one's head is up one's ass.

 

[StageLeft]

Yes he has been, in fact he discredited himself with his contrition regarding the market. People here may argue it wasn't free enough but in any case that is not his own view; he has admitted fault.

 

[Robor]

He said he was wrong. I think he discredited himself, willingly.

/thread

 

[heyheybooboo]

Well...he was an avid fan of Ayn Rand, that should say everything about the man's intellect.

No Fan of Ayn Rand would be in Control of Money.

That's just ignorant.

-John

Oh, r'lly ???

From Greenspan's book:

That Congressional medal should be taken away from Greenspan and given to Brooksley Born with the apologies of the American people.






--

 

[StageLeft]

Strange thing this recession, most of us believe that more regulation is needed but some diehards say it was regulation that caused the problem. This reminds me of the argument for Communism. It goes that Communism really is great, it's just that it's always failed because it's never been applied properly.

So this begs the question: Where has unfettered capitalism worked? What market is the most free? And the freest market I can think of is in Somalia, granted a country utterly fvcked in many ways, but how is that working for them?

We are in this mess now because people gamed the system without sufficient oversight. When you have two parties and one is privy to expertise they will get the upper hand. Thus if you have a banking industry regulated less with more freedom to do what it wants it will sodomize you even harder. This is also called a monopoly because that's what it will become. Since money and power are self-feeding and grow like a snowball, as you gain money and power you become more able to take it from others. Countries can do this militarily, corporations can do it monetarily, and when they gain that money and power the individual loses leverage and freedom.

To deregulate you are in essence saying that the best wishes of man, albeit it frequently sidelined by incompetence, should not be our guiding principles but rather we should subject ourselves to greed and avarice. And it seems everyone understands there is an inherent balance that must be struck to allow some level of freedom in markets. Everyone, that is, except Rand sycophants who think everybody has the power or competence to make the correct choice at all times via their wallet.

 

[Genx87]

I think you are confusing capitalism which is private ownership of production with an utterly free(anarchy) market.

There is always a need for a legal framework for markets. The pissing matches start at when does regulation become a burden on the market while offering none of the benefits.

That said one of the most ironic things I have read is the Soviet Union and the Eastern Bloc survived longer than they should have due to black markets(anarchy).

 

[soccerballtux]

we agree he took advantage of the asian financial crisis to drop interest rates when he should have raised them (not because of the asian crisis but because of the exploding .com sector)
Lead to our first major bubble.
Perpetuated it with the drop of rates in 2001/2002.

 

[daishi5]

Strange thing this recession, most of us believe that more regulation is needed but some diehards say it was regulation that caused the problem. This reminds me of the argument for Communism. It goes that Communism really is great, it's just that it's always failed because it's never been applied properly.

So this begs the question: Where has unfettered capitalism worked? What market is the most free? And the freest market I can think of is in Somalia, granted a country utterly fvcked in many ways, but how is that working for them?

We are in this mess now because people gamed the system without sufficient oversight. When you have two parties and one is privy to expertise they will get the upper hand. Thus if you have a banking industry regulated less with more freedom to do what it wants it will sodomize you even harder. This is also called a monopoly because that's what it will become. Since money and power are self-feeding and grow like a snowball, as you gain money and power you become more able to take it from others. Countries can do this militarily, corporations can do it monetarily, and when they gain that money and power the individual loses leverage and freedom.

To deregulate you are in essence saying that the best wishes of man, albeit it frequently sidelined by incompetence, should not be our guiding principles but rather we should subject ourselves to greed and avarice. And it seems everyone understands there is an inherent balance that must be struck to allow some level of freedom in markets. Everyone, that is, except Rand sycophants who think everybody has the power or competence to make the correct choice at all times via their wallet.

Unfettered capitalism can never be tried because some of the assumptions that are needed for a full and complete free market cannot be found in reality.

 

[Holst]

So this begs the question: Where has unfettered capitalism worked? What market is the most free? And the freest market I can think of is in Somalia, granted a country utterly fvcked in many ways, but how is that working for them?

Hong Kong enter stage right

To deregulate you are in essence saying that the best wishes of man, albeit it frequently sidelined by incompetence, should not be our guiding principles but rather we should subject ourselves to greed and avarice. And it seems everyone understands there is an inherent balance that must be struck to allow some level of freedom in markets. Everyone, that is, except Rand sycophants who think everybody has the power or competence to make the correct choice at all times via their wallet.

I don't agree with Rand that the success of such a system depends on the moral fortitude of the industrialists. I believe that in such a system, it will be near impossible for anyone with a dishonest business model to succeed for an extended period of time. The system is reliant on competition, if you have vast competition then any mistakes made by one company (like said dishonestly) would be left out from the competitor's business model.

 

[brencat]

we agree he took advantage of the asian financial crisis to drop interest rates when he should have raised them (not because of the asian crisis but because of the exploding .com sector)
Lead to our first major bubble.
Perpetuated it with the drop of rates in 2001/2002.

+1 Exactly right. I believe Greenspan, more than any other individual is the person most responsible for the financial crisis of 2008. I think what has been discredited in all of this is the notion of throwing liquidity/cheap money at the problem every time we have a recession. Sorry, but I think there is a floor below which we should not go (say 2%?) to protect savers and punish spendthrifts. What we are doing/have been doing is punishing savers to bail out the reckless. Consequences of higher unemployment short term, deflation, etc. be damned. We're going there anyway, only delaying the inevitable. And the hangover will be so much worse.

 

[Miramonti]

You are so wrong jjsole.

A Bank, is an example of an Investment Firm.

I'm reminded of the movie "It's a Wonderfl Life."

I hate that movie.

-John

And $.25 gets you a gum ball. Dizzying isn't it?

 

[Miramonti]

Companies are driven to these measures when they have the government breathing down their neck with regulations and restrictions. If you simply let the free market take it's course, these problems are naturally resolved and probably wouldn't occur in the first place.


There hasn't been a investment vehicle or trading mechanism that could exist free from regulation because that has never happened. Government has always had a role; government has always stopped these firms from performing efficiently. The problem is Washington feeling that it needs to control something that shouldn't be.

That's text book theory, toilet paper reality. There is no such thing as a free market, and there should never be. Government never prevented Charles Ponzi from operating efficiently. Why did he do what he did, and do it so successfully?

Because he could.

This is the wall street modus operandi if left unchecked in nearly any measure. I don't need to prove that to you, they already have.

 

[Holst]

That's text book theory, toilet paper reality. There is no such thing as a free market, and there should never be. Government never prevented Charles Ponzi from operating efficiently. Why did he do what he did, and do it so successfully?

Because he could.

I don't understand. What is the point of government anyway if they can't effectively prevent crime, leaving these criminals are able to do whatever they want? It's existence is to protect the people and if it fails in doing that, then it's useless.

This is the wall street modus operandi if left unchecked in nearly any measure. I don't need to prove that to you, they already have.

Their goal is to make money and if resorting to these measures is the most efficient way to do it, then of course some will. Unregulated companies would be unable to continue business using shady marketing practices, competition weeds out the dishonestly.

 

[jhu]

I don't understand. What is the point of government anyway if they can't effectively prevent crime, leaving these criminals are able to do whatever they want? It's existence is to protect the people and if it fails in doing that, then it's useless.

So I suppose cops should all just go home since there's always going to be crime?

Their goal is to make money and if resorting to these measures is the most efficient way to do it, then of course some will. Unregulated companies would be unable to continue business using shady marketing practices, competition weeds out the dishonestly.

And how does that explain the homeopathy market? Look, all companies can lie through their teeth as long as they don't think they can get caught in order to extract more profits. It doesn't matter if they're regulated or not. Look at the recent melamine milk scandal in China, Ford Pinto debacle, the fall of LHTC, Bernie Madoff, Enron, Parmalat, etc. The common thread between all of these scandals is the lack of transparency.

 

[Miramonti]

I don't understand. What is the point of government anyway if they can't effectively prevent crime, leaving these criminals are able to do whatever they want? It's existence is to protect the people and if it fails in doing that, then it's useless.

Goverments can never discourage, prevent, or effectively police (or grant authority to police) all crimes 100% of the time.

Their goal is to make money and if resorting to these measures is the most efficient way to do it, then of course some will. Unregulated companies would be unable to continue business using shady marketing practices, competition weeds out the dishonestly.

lol, what world do you live in? If they have what someone wants or needs (products, services, kickbacks/commissions, etc.), others will keep them in business.

 

[bamacre]

Well...he was an avid fan of Ayn Rand, that should say everything about the man's intellect.

Except when he wondered away and became chairman of an institution that Rand opposed.

 

[LegendKiller]

we agree he took advantage of the asian financial crisis to drop interest rates when he should have raised them (not because of the asian crisis but because of the exploding .com sector)
Lead to our first major bubble.
Perpetuated it with the drop of rates in 2001/2002.

I know it's popular to blame rates, but it is irrational.

 

[bamacre]

Regarding Rand and the Fed...
http://www.youtube.com/watch?v=OWnhX2koVEc

Greenspan admitting the job of the Fed is impossible...
http://www.youtube.com/watch?v=i2AqGQirW1Y

 

[Miramonti]

I know it's popular to blame rates, but it is irrational.

A-greed.

 

[nobodyknows]

Greenspan's world view was completely wrong.

Back in the day, I liked/supported Nixon but even then I hated Greenspam.

 

[piasabird]

I think if you go back and look at the economic policies you will find that people including Greenspan were in fact making reccommendations for change. People like Barnie Frank and others in Congress just ignored them. Even Bush probably tried to warn those in charge in congress. Ask Bernanke what he was doing about the problems??

I think it is just convenient to blame the other guys if you are in power.

The idiots in Congress have to approve new terms of the chairman of the Federal Reserve. It is Congress that is to blame.

 

[ModerateRepZero]

If you want to dance with the devil, who am I to stop you?

I know next to nothing about derivative trading.

So, you are telling me, that my Government (which theoretically knew about derivative trading) analyzed derivative trading, and decided it was fine.

Or, did they not understand derivitave trading either? My Government.

Meanwhile, the fucks doing Derivitaive trading rack up some losses, and come crying home to the Federal Government's tit.

If people want to commit suicide, no law prevents unassisted suicide. On the other hand, if the idea of suicide is to crash a plane a la Austin, Tx IRS building or when someone tries to ram their car in traffic but ends up killing innocent bystanders, it IS other people's/govt. business.
In the same vein, derivative contracts by themselves serve a purpose of insuring against a loss. However, derivative contracts went amuck, and not all of it is due to AIG/insurer incompetence (ie Goldman Sachs allegedly pressuring AIG to pay up ASAP on contracts). Plus calling in all derivative contracts was more than companies could pay. Should companies generally speaking honor their contracts? certainly. Does that by itself justify companies going bankrupt and crushing the entire financial system? Of course not.

I think if you go back and look at the economic policies you will find that people including Greenspan were in fact making reccommendations for change. People like Barnie Frank and others in Congress just ignored them. Even Bush probably tried to warn those in charge in congress. Ask Bernanke what he was doing about the problems??

I think it is just convenient to blame the other guys if you are in power.

The idiots in Congress have to approve new terms of the chairman of the Federal Reserve. It is Congress that is to blame.

Greenspan in the beginning worried about a bubble, but he later dismissed the possibility that a bubble burst could be *very* catastrophic. And while Congress does have the power of appointment regarding the Fed Reserve, they do not implement monetary policy directly; that's the FED'S job. And no reasonable person can expect most harried congressmen to read the fine print and understand the financial market any more than they understood our waterboarding policies.