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 ·magicjack.com
3 edits | reply to S_engineer
Re: And who said Google could do no wrong! said by S_engineer:No...its because Congress along with the regulators failed to do their job. You're partially correct. That was one factor. But, "vpoko" is very correct. Just look at the effort to regulate derivatives in 1997. The commissioner of the futures and commodities agency was squashed like a bug when she raised concerns about the opacity of derivatives.[1] She predicted they would be our undoing.
She was squashed by Greenspan, Rubin and Summers. Congress proceeded to pass legislation in 1999 to prohibit states from regulating Credit Default Swaps as insurance (requiring capital reserves). That was a Republican Congress, and a Democrat President.
For what it's worth:
• Greenspan retired just before the train wreck, appearing before congress admitting his libertarian worldview had been proven wrong.
• Rubin, appointed by Democrat President Clinton, went on to lead Citibank -- one of the largest recipients of bailout money. And, considered among the least capable to repay.
• Summers became President Obama's financial adviser.
"A good time was had by all."
You're definitely right that the regulatory agencies could have done a better job with the tools they had. But, there's no doubt that those tools were limited by legislation (influenced by the financial industry). That culture of deregulation influenced the agencies and their application of the tools they had.[2]
[1] The story can be watched here: PBS Frontline: The Warning. Click the link to watch the full program online.
[2] Read the massive book, Too Big To Fail, which documents the hour-by-hour interactions of industry insiders and regulators during the meltdown. Particularly Treasury Secretary Paulson's near-visceral reaction to SEC Secretary Cox's blatant capitulation of his regulatory tools when they were needed most. A true eye-opener. | |
Core0000Premium
join:2008-05-04
Somerset, KY | ...I never knew Alan Greenspan had a "Libertarian worldview"...
Anyways, did you recall all of what you said from memory or is it because you read those books recently?
IF its from memory I am feeling really bad right now. V_V' | |
Reviews:
·magicjack.com
2 edits | reply to Core0000
Re: And who said Google could do no wrong! said by Core0000:...I never knew Alan Greenspan had a "Libertarian worldview"... The Frontline video[1] gives a brief introduction to Greenspan's libertarian beliefs and his association with Ayn Rand (who was his guest at the White House when sworn in as Chairman of the Council of Economic Advisers to President Ford). He described himself as a "lifelong libertarian Republican."[2]
Therefore, it's not difficult to understand what he meant when testifying before Congress after the economic collapse, saying he was wrong about how "free markets could regulate themselves without government oversight." Or, "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,"[3].
Those who've been involved with libertarianism know that he was touching the Article of Faith. Consensual relationships. The non-coercion principle which drips from Ayn Rand's writings.
I believe Greenspan was a genius. But, when you listen to him, it sounds like he could talk around anything. He was so motivated by libertarian ideology that he would talk in circles to avoid reality interfering with his worldview.
For example:
quote:
Dogmatic market capitalists hailed the trend, none more enthusiastically than Greenspan. He claimed, implausibly, that a lack of margin requirements would "promote the safety and soundness of broker-dealers, by permitting more financing alternatives and, hence, more effective liquidity management." In the week before LTCM imploded, he told Congress, "Market pricing and counterparty surveillance can be expected to do most of the job of sustaining safety and soundness." And, in 2003, he told an investment conference:
"Critics of derivatives often raise the specter of the failure of one dealer imposing debilitating loses on its ounterparties, including other dealiers, yielding a chain of defaults. However, derivative markets participants seem keenly aware of the counterparty credit risks associated with derivatives and take various measures to mitigate those risks." This is the same Greenspan who told Congress that the Fed had to intervene in the LTCM crisis, because:
"Had the failure of LTCM triggered seizing up of markets, substantial damage could have been inflicted on many market participants, including some not directly involved with the firm, and could have potentially impaired the economies of many nations, including our own." In other words, counterparty surveillance works fine, so long as you're willing to accept the occasional crash of "the economies of the nations." But given the enormous rewards that accrue to top-of-the-food-chain players like LTCM partners, true market-believers may find that a cheap enough price.[4]
That's the "worldview" which he ended up saying had been proven wrong. It's easy to deregulate everything, resulting in a massive party. Just because the party lasts for 10-20 years doesn't mean a hangover isn't coming.
Greenspan's pre-crash reasoning was like the person driving without brakes on the interstate. "I've gone 200 miles without needing any brakes!" -- frantically explaining away the pile-ups he drove past. When Greenspan testified before Congress, he looked exactly as you'd expect of such a driver. Feeling a bit foolish? Humbled?
said by Core0000:Anyways, did you recall all of what you said from memory or is it because you read those books recently? I read a lot. I write notes to support my memory.
[1] »www.pbs.org/wgbh/pages/frontline/warning/
[2] »en.wikipedia.org/wiki/Alan_Green···f_office
[3] »current.com/groups/money/8944413···rong.htm
»www.bloomberg.com/apps/news?pid=···h9Up4rIg
See also, the last 5 minutes of the Frontline video, supra note 1.
[4] Two Trillion Dollar Meltdown, Chapter 3. | |
| reply to Core0000
from Wikipedia: “Greenspan describes himself as a ‘lifelong libertarian Republican.’”
Wikipedia's cite is the front page of the WSJ from 2007. I'll accept the accuracy. Why question it? | | |
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