Housing Flameout: California falls into the sea

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Housing Flameout: California falls into the sea

By Mike Whitney

10/20/07 "ICH " -- -- Is it really fair to blame one man for destroying the US economy?

Probably not. But Alan Greenspan is still tops on our list. After all, Greenspan “presided over the greatest expansion of speculative finance in history, including a trillion-dollar hedge fund industry, bloated Wall Street-firm balance sheets approaching $2 trillion, and a global derivatives market with notional values surpassing an unfathomable $220 trillion.” (Henry Liu, “Why the Subprime Bust will Spread” Asia Times) Greenspan’s also responsible for slashing the real Fed Funds Rate so that it was negative for 31 months from 2002 to 2005. That decision flooded the housing market with trillions of dollars in low interest credit creating the largest equity bubble in history. Now that that bubble is crashing; Greenspan has hit the road. He now spends his time leap-frogging from city to city hawking his revisionist memoirs of how he steered the ship of state through troubled waters while fending off protectionist liberals. Look for it in the Fiction section of your local bookstore.

Still, can we really blame “Maestro” for what appears to have been a spontaneous flurry of “free market” speculation in real estate?

To a large extent, yes. Apart from Greenspan’s tacit endorsement of all the dubious loans (subprime, ARMs etc) which flourished during his reign; and despite his brusque rejection of the Fed’s role as regulator; the Federal Reserve’s own documents (“House Prices and Monetary Policy: A Cross-Country Study”) indicate that housing was “specifically targeted” acknowledging that it would serve as “a key channel of monetary policy transmission”. This is not even particularly controversial any more. In fact, we can see that this same scam has been used in England, Spain and Ireland---all now suffering the effects of massive real estate inflation.

concerns his rationalization that says people will not improve themselves (therefor they are to blame for his failures).
This is something he expells during his book tour.
Man, he's disgusting.

like he 'hasn't' bent over a million times for his masters?!!

made money, and they're probably making it again off the collapse of the housing market. It was totally orchestrated, and has nothing to do with you or me. What's good for Wall Street is usually not good for Main Street. It's just a way for the powers-that-be to rake in more money and consolidate their power.

For the Steely Dan fans.