Greenspan: credit crunch “by far the greatest financial crisis”

total credit market debt as percent of usa economy

greenspan and bernanke keep interest rates at zero both are vampires

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.”

Greenspan just said that the current credit crunch is “by far the greatest financial crisis, globally, ever” — including the 1930s Great Depression.

This is all eerily remiscent of the police in the movie Casablanca “I am shocked, shocked to find gambling going on here…” Indeed, when people if position talk like this it means one of two things: either they are outright liars, or they are stupid. Since I doubt the latter, after all he would never have made it to where he is as a dunce, then he must be telling fibs. The fact is Mr. Greenspan himself oversaw the longest preriod of “easy credit” and historically low interest rates in decades. He was also instrumental in the deregulation of financial markets. So essentially he himself , and those who went along with him, are to blame for the mess the U.S., and now the World, are in.

“The critical question here, I would argue, there is no evidence that you actually can foresee these crises. We certainly know when risk is being underpriced, but risk tends to be underpriced often for years. But to distinguish between evaluating when that risk is underpriced and therefore you’re essentially in a bubble — it’s another way of saying you’re in a bubble. It’s quite another issue to say when that bubble is going to be pricked. And am I saddened that I couldn’t find the point? Not really. If I did, it would have been by luck, and luck is not something you tend depend on.” — Alan “Reptillian Shapeshifter” Greenspan, 2009


total credit market debt as percent of usa economy

Greenspan claims that he thought that the lending institutions would protect their shareholders when he knew this to be false. The lending institutions knew very well that lending large sums of money to bad credit risks was eventually going to have serious consequences. They also knew, as did Greenspan, that the government (the taxpayer) would have to bail them out. Neither the CEO’s of these lending institutions or Greenspan are stupid and knew very well that it would be a taxpayer financed rescue. Greenspan is an intelligent man who understands finance and understands that when you sell and investment to a client backed by a mortgage held by a bad credit risk and do it on a massive scale that it will hit the fan eventually. Indeed, when people like him say he was “shocked” we should conclude that his credibility is shot. He should just go back into retirement with his big fat pension where he came from. I’m sure he won’t have any problem paying his $3,000 portion of Bushs’ $700 Billion (in reality is over 25 trillon) taxpayer funded bailout. A claim the average American probably won’t be able to make.

A full audit of the Federal Reserve (which as never once happened in 70+ years) would put Greenspan, Volcker, Bernanke and their hitmen all behind bars if they were held accountable like ordinary citizens are by the law.

As the Federal Reserve’s power has grown over the years, so has its outrageous and audacious sense of being above the law. Today it simply refuses to account for trillions of dollars it has given away to foreign banks; hell with accounting, it flat-out won’t even name the banks which received the funds when asked.

Greenspan: Worst Financial Crisis EVER, INCLUDING the Great Depression

Tuesday, February 23, 2010 WashingtonBlog

Greenspan just said that the current credit crunch is “by far the greatest financial crisis, globally, ever” — including the 1930s Great Depression.

Bloomberg notes:

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.”

Greenspan also said “fiscal affairs are threatening this outlook” for recovery.

As I pointed out last May:

The following experts have said that the economic crisis could be worse than the Great Depression:

* Fed Chairman Ben Bernanke

* Economics professors Barry Eichengreen and and Kevin H. O’Rourke (updated here)

* Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb

* Former Fed Chairman Paul Volcker

* Nobel prize winning economist Joseph Stiglitz

* Economics scholar and former Federal Reserve Governor Frederic Mishkin

* Well-known PhD economist Marc Faber

* Former Goldman Sachs chairman John Whitehead

* Morgan Stanley’s UK equity strategist Graham Secker

* Former chief credit officer at Fannie Mae Edward J. Pinto

* Billionaire investor George Sorors

* Senior British minister Ed Balls

Unfortunately, virtually everything the American government has done since the crisis started has been counterproductive. See this, this, this, this, this, this, this, this, this, this and this.

The same is true of most other governments.

In the understatement of the day, Greenspan also called the recovery “extremely unbalanced,” driven largely by high earners benefiting from recovering stock markets and large corporations. You can read the full post at WashingtonBlog.

One thought on “Greenspan: credit crunch “by far the greatest financial crisis””

  1. It is all Greenspans fault now….. Where were you guys in his heyday?
    I remember he would walk into a room, the room would usher silence, and Greenspan would mumble some incoherent soliloquy like a Japanese Haiku poet, and everyone would be hanging on every word. Next day his picture and “interpretation” would be printed in every newspaper worldwide. Now his picture is only printed on toilet rolls.

    You are all as bad as one another. How many web sites do I see the “if only you had listened to me, I had the answers” and “Hey! here are my new 10 baggers to beat the recession.”
    The next scam is what???

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