|
Post by unlawflcombatnt on Nov 27, 2010 11:38:21 GMT -6
Matt Taibbi has a new book out named "Griftopia."
I haven't read it yet, but it sounds like a good one.
Here's a brief commentary on part of the book from Finance Yahoo Tech-Ticker: Taibbi Blames Greenspan: "The Biggest (Blank) in the Universe" Nov 24, 2010 by Aaron Task " In All the Devils Are Here, co-authors Joe Nocera and Bethany McLean, say the answer to the "who's to blame for the crisis?" question is everybody, as the title of the book implies.
That's poppycock, according to Rolling Stone contributor Matt Taibbi, who'd probably use an unprintable expletive rather than "poppycock."
In his new book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America, Taibbi lays the blame for the financial crisis largely at the feet of one man: Alan Greenspan.
"He had this specific role as the Fed chief and created this psychological condition on the Street where everybody knew that every time they screwed up...he would come to their rescue," Taibbi says. "Daddy would bail everybody out with all this cheap money."
Commonly known as "the Greenspan Put," the belief system is a very specific form of moral hazard that came to dominate the financial landscape during Greenspan's tenure as Fed chairman. Beginning with the market's crash in October 1987 shortly after he became chairman, Greenspan faced a series of increasingly large financial crises - Orange County, Ca. and the Mexican pesos crisis in 1994, the 1997 ‘Asian Flu', the Russian debt default and implosion of Long Term Capital Management in 1998, the bursting of the dot.com bubble in 2000, the 9/11 terror attacks in 2001 and the beginning of the end of the housing/subprime bubble at the end of his tenure in 2006.
In almost every case his "solution" was to flood the system with money and bail out the speculators.
Adding insult to injury, Taibbi notes, Greenspan professed to be a devotee of Ayn Rand's philosophy of objectivism, which abhors state involvement or interference in almost any aspect of society, most certainly the markets.
Greenspan pushed for Rand-style deregulation such as the repeal of Glass-Steagall, which helped give us the "too big to fail" banks, and opposed efforts to regulate derivatives, predatory mortgage lending and...just about anything else.
"He represented this kind of contradiction," Taibbi says. "On the one hand, it's this 'arch-capitalist, government has no role anywhere, hands off everything' ideology and at the same time he was building this welfare state" for Wall Street.
For these reasons -- and his subsequent refusal to take any real responsibility for his actions -- Greenspan deserves outsized blame for the financial crisis and its aftermath, says Taibbi, who calls the former chairman the "the biggest [blank] in the universe" in his decidedly un-PC and highly entertaining new book."
|
|
|
Post by fredorbob on Nov 28, 2010 1:10:43 GMT -6
So Greenspan was the author of the "Starve the Beast" theory that you cut taxes in the face of massive deficits?
So Greenspan signed NAFTA and a bunch of other FTA's?
So Greenspan was one of them Congressmen who voted YAY on more guest workers or Amnesty?
The Federal Reserve has 2 contradictory missions, set by Congress since 1913:
1) A stable money supply
2) Maximum employment
#2 conflicts with #1 because the best way to achieve #2 is to inflate the dollar.
The best way to fix the federal reserve is to get rid of #2 for the FED's mission. No more confusion.
I see Alan Greenspan or any other Fed Chairman as a robot, not an independent entity; although this mechanical robot occasionally spouts Neocon/Libertarian pro-slavery propaganda and I wish he would drop dead or choke to death.
|
|
|
Post by unlawflcombatnt on Nov 28, 2010 2:47:12 GMT -6
The Fed's monetary policies of the last 30 years obscured the damage being done by free trade and outsourcing. Americans were able to continue to increase their spending while their real wages declined.
Thanks to the Fed's Corporate welfare policies, Wall Street profits accelerated, despite proportionally smaller increases in production sales (and despite even smaller increases in wage-financed real consumer spending).
Without the Fed's handouts to banks and ultimately the rich, the damage from free trade would have been noticed many years earlier.
And without the constant cheer-leading and falsely optimistic reporting by the Corporate media, the housing-bankster-financier bubble would have been detected sooner.
Anyone with common sense, and even 1 day's worth of of an introductory economics class, could have seen that the housing market was in a bubble in 2005.
Every market crash since Greedspan became Fed chairman has been handled the same way--by the Fed giving rich bankers still more money to invest in the stock market--and to continue paying themselves outrageous salaries and bonuses for producing absolutely nothing in the way of tangible value.
In fact--at the present time--the Fed is making the economy worse by it's bankster/Corporate welfare policies. By giving excessive amounts of money to the already rich, the Fed is increasing the supply of investment capital without any corresponding increase in investment demand.
As a result, much of that capital is going into areas where demand cannot fall--such as food commodities. The end result of this is the over-investment in food commodities by the recipients of the Fed's largesse. This, in turn, causes higher food commodity prices. This ultimately results in higher food prices and an increased portion of consumer income going toward purchase of food. This leaves less money to purchase non-food items, thus reducing the demand for production of non-food goods, as well as demand for labor to produce non-food goods.
Less demand for labor reduces both employment and the wages of those still employed. This further reduces consumer-labor buying power, further depressing both production demand and demand for labor.
Again, the Fed is directly responsible for much of this, by giving investors the additional capital for food commodity speculation--thus increasing the % of income consumers must devote to food purchase.
All I can say is: You're doing "a heckuva a job", Benny.
|
|
|
Post by waltc on Nov 28, 2010 13:40:36 GMT -6
ULC
Much blame can also be squarely put on the shoulders of Congress and Presidents Clinton, Bush Obama as put forth in this mock letter written by Barry Ritholtz to Uncle Sam.
DEAR Uncle Sam Sucker,
I was about to send you a thank you note for bailing out the economy . . . but then some nice men dressed in Ninja outfits came in and shot me full of truth serum. That led me to make one more set of edits to my letter thanking you for saving the economy. It also helped me recall some things I seemed to have forgotten in my other public pronunciations about the bailouts.
I suddenly recalled who it was who allowed the banks to run wild in the first place: You. Your behavior before, during and after the crisis was the epitome of a corrupt and irresponsible government. You rewarded incompetency, created moral hazard, punished the prudent, and engaged in the single biggest transfer of wealth from the citizenry of the United States to the Wall Street insiders who created the mess in the first place.
Kudos. Before I get to the bailouts, I have to remind you that in: • 1999, you passed the Financial Services Modernization Act. This repealed Glass-Steagall, the law that had successfully kept main street banking safely separated from Wall Street for seven decades. Even the 1987 market crash had no impact on Main Street credit availability, thanks to Glass-Steagall.
• 1997-2010, you allowed the Credit Rating Agencies to change their business model, from Investor pays to Underwriter pays — a business structure known as Payola. This change effectively allowed banks to purchase their AAA ratings, and was ignored by the SEC and other regulators.
• 2000, you passed the Commodities Futures Modernization Act. It allowed the shadow banking industry to develop without any oversight by the Commodity Futures Trading Commission, the SEC, or the state insurance regulators. This led to rampant creation of credit-default swaps, CDOs, and other financial weapons of mass destruction — and the demise of AIG.
• 2001-04, the Fed, under Alan Greenspan, irresponsibly dropped fund rates to 1%. This set off an inflationary spiral in housing, commodities, and in most assets priced in dollars or credit.
• 1999-07, the Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned such standards as employment history, income, down payments, credit rating, assets, property loan-to-value ratio and debt-servicing ability.
• 2004, the SEC waived its leverage rules, allowing the 5 biggest Wall Street firms to go from 12 to 1 to 20, 30 and even 40 to 1. Ironically, this rule was called the Bear Stearns exemption. These actions and rule changes were requested by the banking industry. Rather than behave as adult supervision, you indulged the reckless kiddies, looking the other way as they acted out. You were the grand enabler of the finance sector’s misbehavior. Hence, you helped create the mess by allowing the banking sector to run roughshod over decades of successful constraints. (Kudos again on that).
There were voices warning about the upcoming crisis, but you managed to turn a deaf ear to them: Warnings about subprime lending, problems with securitization, against the false claim that residential real estate never went down in value, or that the models forecasting VAR were wildly understating risk. An economy driven by growth dependent upon credit fueled consumption was unsustainable, and yet you encouraged that reckless credit consumption. The compensation schemes for Wall Street were hilariously short term (ignored by you); the crony capitalism of Boards of Directors that undercut market discipline was similarly ignored. You encouraged the hollowing out of the US economy, allowing it to become increasingly “Financialized” at the expense of industry and manufacturing. What was once a small but important part of the economy became dominant, yet unproductive, with your blessing.
Bottom line: You were at a loss for understanding the many factors that led to the crisis in the first place.
When the crisis struck, you did not seem to understand the role you should play. Instead of stepping up to halt the financialization, to unwind it, you gave away the shop. You failed to extract concessions from firms on the verge of bankruptcy. Your negotiating skills were embarrassing. In the face of meltdown, you panicked.
You could have undone the decades of radical deregulation at that moment. You could have fired the incompetent management, wiped out the shareholders who invested in insolvent companies, gave the creditors and bond holders a major haircut for their foolish lending. Instead, you rewarded them for their gross incompetence. The solutions you ran with were ad hoc, poorly thought out, improvised. You crossed legal boundaries, putting the Fed in the position of vio0lating its charter and exceeding its mandates. You created a Moral Hazard, the impact of which may not be felt until decades in the future.
Very few of your senior elected and appointed officials understood what was going on.
Rather than offer an intelligent response to the crisis, you delivered brute force: Trillions of dollars were thrown at the problem, papering over its symptoms but not its underlying causes. Well, Uncle Sam, you delivered a motherload of cash. Considering the dollar sums involved, your actions were remarkably ineffective. What was left over afterwards was a wildly over-leveraged consumer whose credit limits had been reached; State and municipal budgets were heavily dependent upon that excess consumer spending, creating huge budget holes because of it. Net net: The resultant economy was in the worst recession since the Great Depression.
As a student of the Great Depression, Ben Bernanke should have had the best grasp – but his bailout of Bear Stearns revealed him to be just another banker, intent on saving the banks – banking system be damned. To give you a clue of exactly how lost Hank Paulson was, he spent his time praying, and creating documents that exempt himself personally for liability. He’s from Goldman, so we know that “team first” ain’t exactly his style. Tim Geithner, who did such a stupendous job overseeing the banks in the first place, was n way over his head. And while I never voted for George W. Bush, I give him great credit for hiding under the bed and pretty much staying out of everyone else’s way. I would call him clueless, but that wouldn’t be fair to the legions of clueless around the world. Sheila Bair grasped the gravity of the situation earliest, and put numerous failed banks through the insolvency process. If we were smart, we would have allowed her to work her way through the entire finance sector, effecting a GM-like prepackaged bankruptcy for Citigroup, Bank of America, Merrill Lynch, Morgan Stanley, AIG, etc. It would have been painful as hell, but we would be much better off had we allowed her to tear the band aid off quickly. Instead, we are suffering through a death of a 1000 cuts, Japanese style.
I would be remiss if I failed to mention my personal positions in this: I made a killing in Goldman Sachs and GE. My investments in Wells Fargo would have been a disaster if not for you. Don’t even get me started with me being the largest shareholder in Moody’s – that was some clusterf#@k. And considering all of the counter-parties that Berkshire Hathaway has, we risked being just another insolvent investment firm along with everyone else had nothing been done.
So I must say thanks to you, Uncle Sam, and your aides. In this extraordinary emergency, you came through for me — and my world looks far different than if you had not.
Your grateful but wide-eyed nephew,
Warren
Lastly I would add a few other elements that helped wreck our economy:
1) NAFTA
2) PNTR for China
3) LBO's that for over a decade allowed Wall Street bandits to take over and loot businesses then sell off the husk or simply blackmail the company for cash. This craze through the 70's and 80's ruined many companies and cost millions of Americans their jobs not to mention hurting our manufacturing infrastructure.
LBO's are still with us today and still causing horrible damage to workers and whats left of our tech and manufacturing sectors.
|
|
|
Post by unlawflcombatnt on Nov 29, 2010 2:43:26 GMT -6
Good assessment by Ritholtz.
I also agree with the inclusion of PNTR with China and NAFTA. We're losing almost $400 billion per year in GDP, due to our combined trade deficits with China, Canada, and Mexico.
That's 5.7 million jobs at $70K/job.
|
|
|
Post by jeffolie on Nov 29, 2010 12:42:06 GMT -6
'Free Traitors' destroyed men in the West (America and Europe) by sending manufacturing work to 'cheap ass labor' men in India and China plus other 'cheap ass labor' men countries starting in 1970 and accelerating under Clinton.
My adult daughters will not date 'broke ass men' who 'but for' sending manufacturing work overseas would have a respectable wage in America. FAMILY FORMATIONS have decline in the West and Japan mostly because of this.
|
|
|
Post by unlawflcombatnt on Nov 30, 2010 3:29:59 GMT -6
'Free Traitors' destroyed men in the West (America and Europe) by sending manufacturing work to 'cheap ass labor' men in India and China plus other 'cheap ass labor' men countries starting in 1970 and accelerating under Clinton. Absolutely right on the money. The shipbuilding industry that I once worked in has been destroyed in this country. The steel making industry has also seen a similar decline. Bush, Clinton, and Summers, et al, should be making daily trips to apologize to the people in the once thriving industrial cities that they helped decimate through their free-traitor polices.
|
|
|
Post by fredorbob on Jan 10, 2011 0:31:16 GMT -6
The Fed just shuffles money around; the stone foundation of an economy is production. It's why I'm here and not in a Ronulan forum going, "All hail Ron Paul. Go Gold Standard. We're not worthy!"
|
|