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02-27-2009, 04:03 PM
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#1
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,585
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Was Greenspan Right?
He made his irrational exuberance comment on 12/5/96, and that day the S&P closed at 744. Today, 12 years later, the S&P closed below that number at 735.
Is he now going to say "I was right, just a bit early"?
Sigh.
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02-27-2009, 06:08 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 1,224
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No he was right then. Unfortunately he did not act on it. When everyone is partying it is hard to be the one turning off the music...
DD
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02-27-2009, 06:10 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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As he was warning about irrational exuberance, the actions he'd take for the next decade with monetary policy encouraged it.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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02-27-2009, 06:30 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Nov 2005
Location: North of Montana
Posts: 2,769
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My hat is wearing thin. Anybody know a super cheap source of tinfoil?
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
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02-27-2009, 06:35 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
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I hope no one is holding their breath waiting for someone to stand up and say "It was my fault"...
__________________
Have Funds, Will Retire
...not doing anything of true substance...
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02-27-2009, 06:41 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,007
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Quote:
Originally Posted by ziggy29
As he was warning about irrational exuberance, the actions he'd take for the next decade with monetary policy encouraged it.
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Ditto! Absolutely right on!
Audrey
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02-27-2009, 07:27 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Aug 2007
Posts: 1,224
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Quote:
Originally Posted by HFWR
I hope no one is holding their breath waiting for someone to stand up and say "It was my fault"...
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Greenspan did admit in testimony to Congress that he was wrong to assume that the markets would police themselves.
There are so many mea culpas. From the consumer taking out a loan they realistically could not afford, the banks and brokers that made the loans possible, the financial corporations that repackaged and sold them, the rating agencies/insurance companies that stamped them AAA and finally the regulatory arms of gov't that failed to police them all.
DD
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02-28-2009, 06:14 AM
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#8
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Full time employment: Posting here.
Join Date: Oct 2002
Posts: 717
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Being right and not acting upon it is being wrong.
__________________
Random Reinforcement is Highly Addictive.
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02-28-2009, 09:23 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
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After admitting he was wrong thinking the markets would self-regulate/self-correct, he went on to say that there was nothing he could have done about it...
__________________
Have Funds, Will Retire
...not doing anything of true substance...
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02-28-2009, 10:44 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Quote:
Originally Posted by HFWR
After admitting he was wrong thinking the markets would self-regulate/self-correct, he went on to say that there was nothing he could have done about it...
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Too bad he didn't try suicide.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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02-28-2009, 11:05 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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Quote:
Originally Posted by DblDoc
No he was right then. Unfortunately he did not act on it. When everyone is partying it is hard to be the one turning off the music...
DD
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I think this is about right.
I recall the "Irrational Exuberance" comment, and believed the idea more than most people (based more on P/E ratios than on Greenspan's comment), and hence avoided stocks.
I felt like I'd really missed the train in 1999. Now, not so bad.
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02-28-2009, 12:24 PM
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#12
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Recycles dryer sheets
Join Date: Aug 2007
Posts: 433
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Greenspan, with his artificially low rates, was a major cause of our present economic disaster.
As others, including myself, have said, future generations will curse him in his grave.
The world would have been much better off if Allen had stuck to his saxophone.
__________________
Consult with only myself as your adviser or representative. My thoughts should be construed as investment advice of the highest caliber. Past performance is but a pale shadow and guarantee of even greater results in the future.
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02-28-2009, 06:04 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,007
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Quote:
Originally Posted by HFWR
After admitting he was wrong thinking the markets would self-regulate/self-correct, he went on to say that there was nothing he could have done about it...
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He is so wrong on that point. He kept those interest rates too low for too long AND he encouraged people to use the low interest rate environment to take on ARMs and buy houses! He saw nothing wrong with the housing boom, didn't caution against it but rather encouraged lawmakers to let it happen.
Audrey
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02-28-2009, 06:24 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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Quote:
Originally Posted by HFWR
After admitting he was wrong thinking the markets would self-regulate/self-correct, he went on to say that there was nothing he could have done about it...
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Nothing he could do? When did he say this, and when did he "realize" he was helpless to stop it? The absurdly low interest rates we saw in the aftermath of the dot-com bubble -- combined with attitudes on Capitol Hill that we need to make as many people (regardless of creditworthiness) as possible homeowners -- was the fuel for this bubble.
Frankly, if someone in a leadership role admits that they were powerless to do something about a situation they were appointed to deal with as a leader, they are an ineffectual leader. Lee Iacocca didn't have that attitude. Steve Jobs didn't have that attitude when he returned to save Apple from the brink of irrelevancy. Why wouldn't we expect the head honcho in terms of national monetary policy to do the same?
Frankly, Greenspan's comments indicate either incompetence or impotence. If the Fed Chairman can't influence monetary policy, who can?
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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02-28-2009, 07:09 PM
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#15
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Recycles dryer sheets
Join Date: Jul 2008
Location: ENE MO - near STL
Posts: 424
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Quote:
Originally Posted by ziggy29
Frankly, Greenspan's comments indicate either incompetence or impotence. If the Fed Chairman can't influence monetary policy, who can?
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Yes indeed. He's showing himself to be a bit of a weasel now. Shrugging his shoulders and saying, "what could we do?"
IMO, he's one of the very few individuals who could have really effected the kind of change in direction that was needed to defuse this catastrophe. I'm not saying he could have done it alone but he could have used his stature as the Fed chairman, lauded by all, to get our leadership's attention.
Alas, it didn't happen. And worse, he threw gasoline on the flames.
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03-01-2009, 08:55 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
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Quote:
Originally Posted by ziggy29
Nothing he could do? When did he say this, and when did he "realize" he was helpless to stop it?
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Try to catch a repeat of the CNBC program on the housing bubble...
House of Cards, Global Economic Collapse, Mortgage Brokers, Investment Bankers, Financial Crisis, Greenspan, Business, Refinance, Credit and Housing Crisis - CNBC.com
CNBC: How housing boom was a house of cards - CNBC TV- msnbc.com
Or, try this:
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Have Funds, Will Retire
...not doing anything of true substance...
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