It is hard to hit a guy when you are down, but let’s give it a try. Has anyone who knows anything at anytime been in charge?
Greenspan, who headed the nation’s central bank for 18 1/2 years, said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a ”state of shocked disbelief.”[Italics mine]
Greenspan now feels quite comfortable in making the astute observation–astute for him, apparently–that
”Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,” Greenspan said. ”Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity.”
And who is to blame? Why it is those naughty investors who had a
heavy demand for securities backed by subprime mortgages by investors who did not worry that the boom in home prices might come to a crashing halt.
When charlatans and hucksters come to your town peddling fancy, cryptic derivatives containing rat poison, well…caveat emptor is the message. What if those peddlers are none other than AIG, Merrill Lynch, Goldman Sachs, Lehmann Brothers? Houses for everyone. Buy a couple. Get them and sell them while they are hot!
Of course, critics of the fabled one point out that his interest rate cuts fueled the fire; they did not lead to any substantial business investments in the states.
Those investments piled overseas. What we had here was easy money for a housing bubble. On this criticism, the fabled one remains sliently aloft.
And where is the bottom, fabled one? When do we know we are there?
…a necessary condition for the crisis to end will be a stabilization in home prices but he said that was not likely to occur for ”many months in the future.”
Many, many moons we must wait. Meanwhile foreclosures proceed apace. In the third quarter, foreclosures spiked 71%, with 81,312 houses foreclosed in September alone. And “265,968 troubled borrowers received foreclosure filings – such as default notices, auction sale notices and bank repossessions.”
All told 765,558 foreclosure filings were made on U.S. properties in the third quarter of this year – up 3% from the second quarter and 71% from the same period last year.
And, the fabled one says we have many moons to go before we hit bottom. He “done seen” the tunnel. Surprise and shock no longer crease that aging brow.
Now, wise even for his advanced years, he can safely tell us that we are in for one hell of a ride. Meanwhile, he will sit all comfy in his big chair, raking in the consulting bucks, writing his memoirs, and writing and rewriting history.
Like the oracles at Delphi, methinks he had a bit too much of a whiff of his own gas.