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(Slate)   "It's as if Richard Nixon wrote a book about how tougher security at the Watergate Hotel could have avoided a lot of problems for America"   (slate.com) divider line 21
    More: Dumbass, Alan Greenspan, Richard Nixon, adjustable-rate mortgages, Dodd-Frank, financial services  
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3766 clicks; posted to Business » on 23 Oct 2013 at 1:33 PM (25 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



21 Comments   (+0 »)
   
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2013-10-23 01:43:55 PM
Greenspan has had an abhorrent predictive track record since leaving the Fed.
He has become the William Kristol of economics.
 
2013-10-23 01:44:28 PM
There are some legit criticisms of Greenspan in there. He definitely has a great deal of culpability for the crisis. But the main point that Yglesias takes issue with:

the actually existing Dodd-Frank financial regulation overhaul is a pointless increase in the regulatory burden, and really the entire crisis could and should have been avoided by imposing stiffer capital requirements (i.e., less borrowing) on the financial sector..

Is actually a good take on the subject. Dodd Frank is terrible legislation, forced through without any thought, with only a few bright spots.

Higher capital requirements are necessary, and although this will hurt bank profits and reduce lending, it is prudent.
 
2013-10-23 02:40:28 PM
God, these kinds of assholes are the worst kind, if you ask me. Somebody who was a part of the system and had the power, but completely failed to use it for any meaningful improvements and instead did the EXACT WRONG THING. Then they get out of the position of power and start espousing the opposite position as if everybody will suddenly forget that they were the asshole who had the misguided policies in the first place.

It's like if George Bush suddenly said we should stay out of the middle east, or Dick Cheney that we needed more investment in renewable resources and should end subsidies to oil companies. WELL WHY DIDN'T YOU DO IT, ASSHOLE.
 
2013-10-23 02:46:42 PM
What a dolt!
 
2013-10-23 03:24:14 PM

phyrkrakr: God, these kinds of assholes are the worst kind, if you ask me. Somebody who was a part of the system and had the power, but completely failed to use it for any meaningful improvements and instead did the EXACT WRONG THING. Then they get out of the position of power and start espousing the opposite position as if everybody will suddenly forget that they were the asshole who had the misguided policies in the first place.

It's like if George Bush suddenly said we should stay out of the middle east, or Dick Cheney that we needed more investment in renewable resources and should end subsidies to oil companies. WELL WHY DIDN'T YOU DO IT, ASSHOLE.


If I thought this asshole was the least bit genuine, I'd say, "Better late than never".

If.
 
2013-10-23 03:34:11 PM

Debeo Summa Credo: There are some legit criticisms of Greenspan in there. He definitely has a great deal of culpability for the crisis. But the main point that Yglesias takes issue with:

the actually existing Dodd-Frank financial regulation overhaul is a pointless increase in the regulatory burden, and really the entire crisis could and should have been avoided by imposing stiffer capital requirements (i.e., less borrowing) on the financial sector..

Is actually a good take on the subject. Dodd Frank is terrible legislation, forced through without any thought, with only a few bright spots.

Higher capital requirements are necessary, and although this will hurt bank profits and reduce lending, it is prudent.


this
 
2013-10-23 03:36:10 PM

Debeo Summa Credo: Higher capital requirements are necessary, and although this will hurt bank profits and reduce lending, it is prudent.


We should just bring back Glass Steagle, which has a proven track record.
 
2013-10-23 04:19:39 PM
You don't need a lot of regulation if you require banks to be capitalized by investors (not loans), put their own capital at risk as a significant percentage of any loans they make, don't let them leverage their capital to the sky, and make it clear that their money gets taken first and the investors wiped out in the event the government has to step in.
 
2013-10-23 04:28:27 PM

Marcus Aurelius: Debeo Summa Credo: Higher capital requirements are necessary, and although this will hurt bank profits and reduce lending, it is prudent.

We should just bring back Glass Steagle, which has a proven track record.


I think that's the "higher capital requirements" part.
 
2013-10-23 05:34:30 PM

qorkfiend: Marcus Aurelius: Debeo Summa Credo: Higher capital requirements are necessary, and although this will hurt bank profits and reduce lending, it is prudent.

We should just bring back Glass Steagle, which has a proven track record.

I think that's the "higher capital requirements" part.


No, as has been explained ad nauseam before, and admitted to by such left wingers as Matthew yglesias and Elizabeth warren , glass steagall wouldn't have done anything to prevent the crisis.

Higher capital requirements can be done independent from any glass steagall separation, and in fact are being raised.

There can always be too much of a good thing (like regulation, see Dodd frank and Sarbanes Oxley, etc.), and capital requirements could be set too high, but from what I've seen what has been proposed in the wake of the crisis is not too high, at least for banks.
 
2013-10-23 06:13:57 PM
You know, Greenspan rightly gets criticized for his role in the crisis. He kept rates too low for too long, encouraged borrowed to use ARMs (not to mention, as TFA says, supporting the Bush tax cuts on the grounds that without them we risked destabilizing markets by paying off the national debt too quickly. Seriously).

But mostly he's blamed as the one guy who could have done the most to contain the bubble before it got as bad as it did, and in the best position to see the bubble inflating, but didnt.

Most people, including myself, think Bernankes done a reasonable job dealing withe the crisis. But one wonders, if there is an inflation crisis or huge spike in treasury rates due to the Feds QE of recent years, if we'll vilify him in retrospect as well.

I mean, tech stocks sure looked like a bubble in 1999, but they still went up because investors didn't collectively realize it was unsustainable and believed that the tech revolution would push stocks to the "dow 36000" level

And house prices sure looked like a bubble in 2005, but the collective market didn't realize it because prices went even higher. "Buy now or you'll be priced out forever!" "Housing never goes down!" Remember those?

When things look like a bubble, it's likely that they are. So what is the bubble today? Treasuries, although they've backed up quite a bit since may, still are offering historically low yields. Why is this when we've issued more debt in the past 4 years than any other 4 year period? Because the fed has been buying almost half of those securities. Eventually, they'll have to stop buying. Eventually start selling most likely. The deficit isn't going away. Social security is no longer going to be a net buyer of treasuries. rather, it will be a seller as the trust fund is redeemed to pay benefits.

What will these factors do to treasury prices?

Are US treasuries today's bubble?
It looks like it.

Im not a goldbug btw. Its just a thought.
 
2013-10-23 07:19:47 PM

Debeo Summa Credo: No, as has been explained ad nauseam before, and admitted to by such left wingers as Matthew yglesias and Elizabeth warren , glass steagall wouldn't have done anything to prevent the crisis.

Higher capital requirements can be done independent from any glass steagall separation, and in fact are being raised.

There can always be too much of a good thing (like regulation, see Dodd frank and Sarbanes Oxley, etc.), and capital requirements could be set too high, but from what I've seen what has been proposed in the wake of the crisis is not too high, at least for banks.


imgs.xkcd.com
 
2013-10-23 07:55:12 PM
Somebody's still wallowing in Watergate.
 
2013-10-23 08:17:33 PM
Greenspan and his policies are proof of what happens when you try to make the Ayn Rand way of doing business work in the real world.

Result: It doesn't. It never could.
 
2013-10-23 08:59:22 PM

Debeo Summa Credo: So what is the bubble today?


Higher Education.  Saddling people with tens of thousands in non-dischargeable, government funded debt isn't sustainable.  Eventually, parents will stop paying for college and kids will stop taking out hundreds of thousands in loans for a stupid degree, and that'll drop back to sane levels.  Huzzah.
There's a mild tech bubble in the Valley because of acqui-hiring and the complete and total anti-development, anti-infrastructure stance of the SF Bay Area.  It's not NEARLY 1999 yet, but still.
Pensions and the resulting push on municipal and state funds (Calpers is funded and a bunch of cities across the state are being driven bankrupt by the actual funding) that will prevent lower taxes or further infrastructure development and services.
 
2013-10-23 11:49:54 PM

meyerkev: Debeo Summa Credo: So what is the bubble today?

Higher Education.  Saddling people with tens of thousands in non-dischargeable, government funded debt isn't sustainable.  Eventually, parents will stop paying for college and kids will stop taking out hundreds of thousands in loans for a stupid degree, and that'll drop back to sane levels.  Huzzah.
There's a mild tech bubble in the Valley because of acqui-hiring and the complete and total anti-development, anti-infrastructure stance of the SF Bay Area.  It's not NEARLY 1999 yet, but still.
Pensions and the resulting push on municipal and state funds (Calpers is funded and a bunch of cities across the state are being driven bankrupt by the actual funding) that will prevent lower taxes or further infrastructure development and services.


Well, that's a different kind of bubble but I hope you are right about the higher education prices.
 
2013-10-24 12:04:43 AM
Greenspan is a horrible person who helped ruin a pretty nice thing (the US economy) in an effort to defend his personal ideology.

I don't care about what he has to say about history; at this point I wouldn't trust him to water a houseplant.
 
2013-10-24 12:17:04 AM
"(Ayn) Rand worried that Greenspan was an opportunist or social climber"
 
2013-10-24 07:23:58 AM

meyerkev: Higher Education. Saddling people with tens of thousands in non-dischargeable, government funded debt isn't sustainable. Eventually, parents will stop paying for college and kids will stop taking out hundreds of thousands in loans for a stupid degree, and that'll drop back to sane levels. Huzzah.


After millions of lives are ruined, but it's not like anyone involved higher up the food chain ever gave a rat's ass.
 
2013-10-24 08:44:50 AM

jjorsett: You don't need a lot of regulation if you require banks to be capitalized by investors (not loans), put their own capital at risk as a significant percentage of any loans they make, don't let them leverage their capital to the sky, and make it clear that their money gets taken first and the investors wiped out in the event the government has to step in.


But...............that would constitute burdensome and onerous regulation of job creators - Repug Bible says we can't do anything like that.
Guess you better start voting for that Democrat Party.
 
2013-10-24 08:47:24 AM

Yakk: "(Ayn) Rand worried that Greenspan was an opportunist or social climber"


Rand worried that her Social Security check wouldn't come on time.
 
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