shotgunner
Full time employment: Posting here.
- Joined
- Jun 18, 2008
- Messages
- 534
Would anyone be surprised to see the FED hold an emergency meeting and cut rates by .25 to .50 basis points in the wake of the failure of the bailout bill?
I don't think a Fed rate cut would do anything to eliminate the constipation in the credit market. It's no longer about whether borrowed money is cheap but whether lent money will be repaid at all.
Plus, recklessly low rates under the Greenspan Fed was one of the primary culprits that led to the current mess.
I think that's part of it. He waited until too late in the business cycle to change monetary policy, which help induce more violent boom and bust cycles -- and led to going overboard with rate actions in response to exaggerated economic peaks and valleys.Much as I am NOT a Greenspan fan, I think in many respects he was TOO SLOW to react to economic issues and either cut too much or not soon enough.
Has Greenspan made any public comments on the bail-out plan? That would be an interesting perspective to contemplate.
For example, what's the deal with "no-income verification" (NIV) loans? I know people with good sources of income and collateral that couldn't get a loan because of a technicality while people with with no sure source of income qualified for NIV loans.
And, I also place the blame on the guy who bought a house without knowing its real value and knowing if he missed a paycheck it could be doomsday for him.
Everyone kinda knew there was no logic in the mortgage and credit business, but they kept playing the game as if nothing would ever happen.
...Well, Congress is placing NO BLAME on those folks...
That's the utterly infuriating thing about this. Some people go on a spending binge much like a drinking binge, but EVERYONE suffers the financial hangover -- not just the bingers whose behavior led to it.That because it's not politically correct to blame stupid.
These people went sailing in a ship knowing it had holes in it's hull while smart people stayed home.
Now the smart people have to jump in the ocean to save them whether we want to or not.
And why was this irrational exuberance in place? I'd say it was the increasingly easy money that led to lower ARM rates which led to lower monthly payments which led to higher "affordable" purchase prices which led to higher prices. Rinse, lather and repeat until the easy money dried up...I think a big part of this whole mess is that people thought home prices were just gonna keep on going up and up and up!!!
Looks like he may be hiding in India: Greenspan, Shultz argue for quick bailout action | Business News | Reuters
One of my ER goals and interests will be to learn more about economics and finance, but as for now, I am just a scientist.
I've said it before and I'll say it again -- I'm not convinced it's a coincidence that this started happening again after the Depression generation began dying out, and there were few cautionary voices left to remind us to heed their experience and avoid repeating those mistakes...Welcome to the "gotta have it now" American Society. Save for a down-payment on a house - NO WAY. I want it now! Save for a decent car - NO WAY. I have to get a new car when I graduate HS. $25,000 Honeymoons - on the VISA Card, Yes, of course, that is what they are for. Kitchen forget it - We eat out 7 times a week (on the CC of course). What do you mean, I can't have or can't use my HELOC now; WTH "they" reduced my CC limit - this is un-American. Vote that bailout plan I am in debt "up to my eyeballs" I need a fresh start.
With a desire to become a 'dismal scientist'? Surely you can aspire to something more worthwhile...
I've said it before and I'll say it again -- I'm not convinced it's a coincidence that this started happening again after the Depression generation began dying out, and there were few cautionary voices left to remind us to heed their experience and avoid repeating those mistakes...
Not only that. But here almost 80 years later from 1929, regulations and controls instituted after the Great Depression and helping keep excesses and recessions from getting too bad in the intervening 75 have consistently been pulled out. Folks didn't think they were "needed" any more. 1999 - repeal of the Glass-Steagal (sp?) Act.; 2004 - permission by SEC for the larger investment banks to use leverage well above the prior 12:1 limit; 2007 - suspension by the SEC of the "uptick rule" for shorting stocks, as well as lack of enforcement of naked shorting; also 2007 - investigative reports indicate that the SEC basically quit monitoring and regulating investment banks.I've said it before and I'll say it again -- I'm not convinced it's a coincidence that this started happening again after the Depression generation began dying out, and there were few cautionary voices left to remind us to heed their experience and avoid repeating those mistakes...
I think he's lost a lot of credibility and anything he says has to be looked at through the lens of him trying to prop up his "legacy" as Fed Chairman.Has Greenspan made any public comments on the bail-out plan? That would be an interesting perspective to contemplate.