Do you think Greenspan's just trying to cover up for his total incompetence with his "oil" statement?

Question

First, Greenspan took interest rates to near historic lows. Millions of marginally qualified people flooded into the home market and purchased property using mortgages with insane terms and conditions. Millions of others got into the market buying up property with the hope of "flipping" it 6 to 12 months down the line for a 30% profit.

Greenspan said he knew about all this speculation and the danger from sub-prime loans.

Then, ever vigilant for non-existent inflation, Greenspan and the Federal Reserve raised interest rates 19 times forcing millions of homes into foreclosure.

Answer 1

I agreee with you that the Fed's low interest rates under Greenspan has created the housing market situation we are in now. He knew what he was doing and he says the home value depreciation will be worse than people think.

I'm interested to read his book and I don't see the connection to his oil statement with covering up for his total incompetence as you're saying. I think we should listen to Greenspan speaking freely, he's seen a lot in his time and his position.

Answer 2

No. Interest rates have always fluctuated historically. If someone is stupid enough to get an adjustable mortgage rate, place the blame where it belongs. Rates are still low, will increase much faster now that Greenspan is out of the public sector.

Answer 3

Under Greenspan I got a low interest re-fi on a fixed loan. The trouble was that people fell for the adjustable mortgage rates and that is what killed them.

Answer 4

Anyone who believes that oil isn't the prime motivating factor for western involvment in the middle east is kiddin' themselves. The west carved up the middle east like the Thanksgiving Turkey after WW1 grabbing up as much of the oil reserves there as they could by installing puppet goverments. If there was no oil there there would be no western involvment there. The Bush Junta's excellent adventure in Iraq is the last gasp of this 100 year neo-imperialism and there simply isn't any way to cover that up. As long as the west installed thugocracies played ball with the Oil Mafia all was well. When Saddam invaded Kuwait and threatened our 'friends' the Saudis we went to war. When Saddam threatened to pass on American dollars in favor of Euros we went to war, and as long as the Bush Junta is in charge, or some future Bush-like government is in charge, there we'll stay!

Answer 5

I was wondering when Conservatives would begin attacking Greenspan. In fact I asked the question a few days ago.

No I don't think Alan needs to cover up anything. He worked for several Republican presidents as well. He is an established winner when it come to the economy...when those presidents actually listened to him...GW Bush didn't.

Answer 6

No, I think this oil businessis just media spin. Greenspan wasn't privy to war meetings and can't know for sure.


"However in an interview with The Washington Post, Greenspan clarified that while securing global oil supplies was "not the administration's motive," it had presented the White House with an opportunity to make the case that removing Saddam Hussein was important for the global economy.

"I was not saying that that's the administration's motive," he said in the interview. "I'm just saying that if somebody asked me, 'Are we fortunate in taking out Saddam?' I would say it was essential."

Answer 7

I take it that your field is not Economics. I watched 60 minutes last night. You have misrepresented everything Mr. Greenspan said. He is a banker. He served for 17 years. He did a good job. The US economy is booming. Inflation is low. Unemployment is low.
Sub prime mortgages are failing for one reason: greed. Borrowers bought more expensive houses than they could afford. Lenders gave loans on the bet that housing prices will continue to rise and thus give greater security to their loans. The bet has not paid off.

Answer 8

This is a partisan rant with little regard to reality. Fact is, Greenspan was one of the finest fed directors this country has seen. He held a steady but more importantly, informed and studious hand during America's incredible expansion during his tenure. Anyone with the slightest knowedge could see mortgages getting out of control, the feds job isn't about creating regulation. Interest rates affect the dbt market and corporate expansion much more than they do the mortgage markets.

Why do so many republicans turn on their own priniples of government to pound a threat to their political dogma filled worlds?

Answer 9

No. Greenspan was the best Federal Reserve Chairman we had. Don't get mad at the messenger. We all know this war is about oil and nothing more.

Answer 10

As I said before, Greenspan, the darling of the Republican Party, the man who taught Reagan how to raid Social Security, will finally be thrown under the bus by his beloved republicans, for saying what everyone knows, This war is WRONG


What do you do when you want to screw only the working people of your nation with the largest tax increase in history and hand those trillions of dollars to your wealthy campaign contributors, yet not have anybody realize you've done it? If you're Ronald Reagan, you call in Alan Greenspan.
Through the "golden years of the American middle class" - the 1940s through 1982 - the top income tax rate for the hyper-rich had been between 90 and 70 percent. Ronald Reagan wanted to cut that rate dramatically, to help out his political patrons. He did this with a massive tax cut in the summer of 1981.
The only problem was that when Reagan took his meat axe to our tax code, he produced mind-boggling budget deficits. Voodoo economics didn't work out as planned, and even after borrowing so much money that this year we'll pay over $100 billion just in interest on the money Reagan borrowed to make the economy look good in the 1980s, Reagan couldn't come up with the revenues he needed to run the government.
Coincidentally, the actuaries at the Social Security Administration were beginning to get worried about the Baby Boomer generation, who would begin retiring in big numbers in fifty years or so. They were a "rabbit going through the python" bulge that would require a few trillion more dollars than Social Security could easily collect during the same 20 year or so period of their retirement. We needed, the actuaries said, to tax more heavily those very persons who would eventually retire, so instead of using current workers' money to pay for the Boomer's Social Security payments in 2020, the Boomers themselves would have pre-paid for their own retirement.
Reagan got Daniel Patrick Moynihan and Alan Greenspan together to form a commission on Social Security reform, along with a few other politicians and economists, and they recommend a near-doubling of the Social Security tax on the then-working Boomers. That tax created - for the first time in history - a giant savings account that Social Security could use to pay for the Boomers' retirement.
This was a huge change. Prior to this, Social Security had always paid for today's retirees with income from today's workers (it still is today). The Boomers were the first generation that would pay Social Security taxes both to fund current retirees and save up enough money to pay for their own retirement. And, after the Boomers were all retired and the savings account - called the "Social Security Trust Fund" - was all spent, the rabbit would have finished its journey through the python and Social Security could go back to a "pay as you go" taxing system.
Thus, within the period of a few short years, Reagan dramatically dropped the income tax on America's most wealthy by more than half, and roughly doubled the Social Security tax on people earning $30,000 or less. It was, simultaneously, the largest income tax cut in America's history (almost entirely for the very wealthy), and the most massive tax increase in the history of the nation (which entirely hit working-class people).
But Reagan still had a problem. His tax cuts for the wealthy - even when moderated by subsequent tax increases - weren't generating enough money to invest properly in America's infrastructure, schools, police and fire departments, and military. The country was facing bankruptcy.
No problem, suggested Greenspan. Just borrow the Boomer's savings account - the money in the Social Security Trust Fund - and, because you're borrowing "government money" to fund "government expenditures," you don't have to list it as part of the deficit. Much of the deficit will magically seem to disappear, and nobody will know what you did for another 50 years when the Boomers begin to retire 2015.
Reagan jumped at the opportunity. As did George H. W. Bush. As did Bill Clinton (although Al Gore argued strongly that Social Security funds should not be raided, but, instead, put in a "lock box"). And so did George W. Bush.
The result is that all that money - trillions of dollars - that has been taxed out of working Boomers (the ceiling has risen from the tax being on your first $30,000 of income to the first $90,000 today) has been borrowed and spent. What are left behind are a special form of IOUs - an unique form of Treasury debt instruments similar (but not identical) to those the government issues to borrow money from China today to fund George W. Bush's most recent tax cuts for billionaires (George Junior is still also "borrowing" from the Social Security Trust Fund).
Former Bush Junior Treasury Secretary Paul O'Neill recounts how Dick Cheney famously said, "Reagan proved deficits don't matter." Cheney was either ignorant or being disingenuous - it would be more accurate to say, "Reagan proved that deficits don't matter if you rip off the Social Security Trust Fund to pay for them, and don't report that borrowing from the Boomers as part of the deficit."