Joined: Mar 09, 2007 Posts: 223 Location: No. Calif.
Posted: Mon Apr 07, 2008 4:13 pm Post subject: Re: Housing & Economic Collapse - In Progress
GeoJAP wrote:
I tend to agree with Greenspan here. I could draw parallelisms to several analogous situations, but the fact is, just because something is there, doesn't mean you must have it or are required to abuse it. Exercise some self-control for chrissakes.
I would fault the lack of regulation on lenders and loan point-of-origin. Their lending standards were crap, sacrificed by their own greed. Low interest rates did not directly cause this problem we are currently facing, it was lack of regulation.
Shall we call him slick-Greenspan, as nothing ever sticks to him??
Nothing was his fault. He is only in charge of money decisions in the biggest [economy/scam/??] in the world. Of course, he knew or should have known, as we don't put morons in such positions, do we?
If money liquidity is going to be provided, one does have some responsibility for how that liquidity is going to be used. Regulation was being relaxed so these ponzi scams could make some people rich (with the tacit understanding that they in turn will support these people in power).
How to explain Europe? Investors are greedy everywhere. There was a lot of follow the leader, no doubt.
Posted: Mon Apr 07, 2008 4:17 pm Post subject: Re: Housing & Economic Collapse - In Progress
GeoJAP wrote:
I tend to agree with Greenspan here. I could draw parallelisms to several analogous situations, but the fact is, just because something is there, doesn't mean you must have it or are required to abuse it. Exercise some self-control for chrissakes.
Greenspan just loaded the gun, tossed the trigger lock and gave it to the investor; he didn't actually pull the trigger.
_________________ "It's called the American Dream because you'd have to be asleep to believe it."
Joined: Mar 12, 2007 Posts: 1004 Location: As close as I can get to the beginning of the pipe.
Posted: Mon Apr 07, 2008 4:23 pm Post subject: Re: Housing & Economic Collapse - In Progress
Twilight wrote:
About the question of who is worse off - the US or Eurozone - I think the answer might be Asia.
Cool avatar, by the way.
Here's an interview from over at ITulip. I don't advocate a lot of their stuff; they are wanna' be Libertarians, and Janszen's questions reveal a perspective frankly insulting to anyone not from the US. And who in their right mind would admit to still being a Libertarian these days, anyway? Free markets . . . right! How's that working out for you?
But this Hudson guy has some interesting perspectives on Asia and on the implementation of "paper-gold certificates." I take my information wherever I can find it.
Quote:
"J: The Chinese also are not innovators in banking and finance. The last time we chatted about them it was your impression that they were going to keep improving their banking system, but that there are still a lot of risks in the stock market and we might be in for some surprises later on.
H: As long as it continues to go up they think its all working. They do have a lot of people like Henry Liu who understand the system very well but obviously there is not policy agreement within the Chinese leadership. There are the Thatcherites who say, “It’s working now, lets keep it this way until there’s a collapse.” But I think in China, Japan and most Asian countries they always have two scenarios in mind. They say, “Here’s our set of actions if the current situation continues. But we also have an alternative plan, a Plan B in case we shift around.” I expect the Chinese have a pretty sophisticated Plan B for how they may change things. This certainly is how America usually operates, after all.
J: Any guesses what Plan B might look like?
H: Well they’ll create their own credit, and extend the Shanghai Cooperation Organization into an economic trading and currency block.
J: So they’ll accelerate a process already in motion to create an Asian-zone currency.
H: Yes, so that they won’t have to be dependent on the US or Europe. They want to be able to create free credit like the US does. They understand that America is creating free credit. They want to do just what America does. If that happens you’ll find Asia acting symmetrically with the United States, while poor Europe and Third World countries are just left out, being squeezed. This is their “choice,” given their current policies.
J: And so, paradoxically, a US-centric crisis might be a forcing function for some kind of significant change in the political and economic arrangements among Asian nations. It already has been to a certain degree. Have U.S. diplomats been anticipating it? (Note: Hudson’s collected books have been translated into Chinese by the State Publishing Company.)
H: I think so. US strategists have been talking now for about thirty years regarding how to counter if and when foreign countries push back against our free ride. The answer is there is no way we can forecast when they will do so, until it actually happens. So we’re just going to keep on doing what we’re doing until there is counter-pressure. So far, there isn’t any counter pressure. The Americans have all sorts of contingency plans, but other countries have shown no apparent plans of their own. They merely respond, not initiate.
J: So what do you think US contingency plans are?
H: Essentially it will be the old paper-gold proposed via the IMF. It will tell foreign central banks, “Okay you have $3.5 trillion of dollar claims on the US Treasury. All we can do is pay you with new notes. But we have a way to solve your problem. (Note that we frame the issue as their problem, not ours.) You’ll turn over these US Treasury bonds to the IMF, and they will give you paper-gold certificates worth $3.5 trillion. These no longer will be liabilities of the US Treasury but they’ll be your assets with the IMF. So we can continue with a ‘clean slate.’ We won’t owe anything, but you’ll still have your $3.5 trillion in assets.” That’s the plan that the US is going to propose as a rescue for itself. A debt repudiation masked as IMF credit creation. Tey will call this “progress,” “innovation,” “reform” – all the usual euphemisms that are trotted out for such bailouts.
J: But what value will those assets then have?
H: It’s what anybody believes they have. In other words, if you believe it, it has value. The key is not “value,” but price. If I give you an IOU for a $100 and you think some day you’ll get something worth $100, then you’re happy. You’ll think, “I have a $100 in savings. I have Michael Hudson’s IOU.” But if you think Michael Hudson isn’t going to pay you, and is just going to laugh, then you’re not going to put up with it. It’s all in the mind. For governments, these magnitudes are units of $100 million each.
J: It’s all in the mind but these are governments and it also depends on what kind of political backlash there is at home. Right now we’re creating inflation all over the world. Russian inflation is like 12%. According to The Peninsula, Inflation rates in Bahrain, Kuwait, Oman and Saudi Arabia December 2007 were 8.4%, 6.6%, 5.3% and 6.5% respectively, and a staggering 12.8 percent and 11.3 percent in Qatar and the UAE. The Saudi British bank estimates a 35% share of imported inflation in overall inflation, meaning dollar inflation."
ITulip Hudson Interview _________________ "When fascism comes to America it will be wrapped in a flag and carrying a cross." --Sinclair Lewis
Posted: Mon Apr 07, 2008 4:24 pm Post subject: Re: Housing & Economic Collapse - In Progress
I have no interest in defending Greenspan "the person". Rather, I think his statements which were referenced were valid.
Last I checked, it is the duty of congress to be the primary legislator of regulation.
In hindsight, we would have been fine with low interest rates, combined with strict lending and accounting standards, and limitations on the degree to which one is leveraged.
Posted: Mon Apr 07, 2008 4:42 pm Post subject: Re: Housing & Economic Collapse - In Progress
Interesting interview, Iaato.
Yes, you always have to allow for the possibility that someone could change the rules of the game. We saw how China buying up everything for sale in Africa took everyone by surprise as though they expected those foreign currency reserves to be accumulated forever and displayed in a museum.
The avatar is the music we have to face, brought to us by a bear market.
Posted: Mon Apr 07, 2008 5:18 pm Post subject: Re: Housing & Economic Collapse - In Progress
[quote="Iaato"]
Quote:
H: As long as it continues to go up they think its all working. They do have a lot of people like Henry Liu who understand the system very well but obviously there is not policy agreement
HC Liu is always worth a read. Bit heavy but I doubt too many here will find fault in much of his reasoning.
Posted: Mon Apr 07, 2008 5:58 pm Post subject: Re: Housing & Economic Collapse - In Progress
GeoJAP wrote:
Iaato wrote:
And who in their right mind would admit to still being a Libertarian these days, anyway? Free markets . . . right! How's that working out for you?
Defining the current condition of the markets to be a result of Libertarian political ideology would be highly inaccurate.
Laissez faire is the very essence of libertarianism. Libertarians have a great understanding of how govt intervention can distort and impede the markets. They have zero understanding of how corporate intervention in the political process, distorts the political process, interferes in the functioning of markets, consolidates power and money in fewer hands, and favors oligopolies while disempowering small business.
Posted: Mon Apr 07, 2008 6:42 pm Post subject: Re: Housing & Economic Collapse - In Progress
threadbear wrote:
GeoJAP wrote:
Iaato wrote:
And who in their right mind would admit to still being a Libertarian these days, anyway? Free markets . . . right! How's that working out for you?
Defining the current condition of the markets to be a result of Libertarian political ideology would be highly inaccurate.
Laissez faire is the very essence of libertarianism. Libertarians have a great understanding of how govt intervention can distort and impede the markets. They have zero understanding of how corporate intervention in the political process, distorts the political process, interferes in the functioning of markets, consolidates power and money in fewer hands, and favors oligopolies while disempowering small business.
I don't want to derail the thread or discount what you said, but I still stand by my point. It is inaccurate to infer that the current situation was caused by Libertarianism.
Firstly, Libertarians weren't in power at the federal level in any sense, so their perceived influence over the financial markets seems rather inflated. One would have to go to the state level and look at Texas and Vermont to see the effect of a Libertarian-like society.
Libertarianism in its most fundamental form may promote small regulation, but the obligatory yang to small regulation's yin is a large dose of personal responsibility. (Expecting self-regulated behavior may be a pipe dream, but that is another discussion.) Personal responsibility (or conversely, regulation) was not even hinted at in the finance industry in the past few years, so it was completely devoid of Libertarianism. It is simply inaccurate to make Libertarian ideals the scapegoat for this mess.
My philosophies most closely lean towards Libertarianism; however, I am definitely a proponent of strong and sound regulation when it is necessary.
Last edited by GeoJAP on Mon Apr 07, 2008 6:51 pm; edited 1 time in total
Joined: Apr 27, 2007 Posts: 4353 Location: The Great Sonoran Desert
Posted: Mon Apr 07, 2008 6:50 pm Post subject: Re: Housing & Economic Collapse - In Progress
WaMu *** up...
Shuts down all wholesale lending effective Thursday.
This should help things along a bit.
No link...breaking ...from my tin foil buddies ya know.
Now where did I leave my hat?? _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
Posted: Mon Apr 07, 2008 7:02 pm Post subject: Re: Housing & Economic Collapse - In Progress
threadbear wrote:
GeoJAP wrote:
Iaato wrote:
And who in their right mind would admit to still being a Libertarian these days, anyway? Free markets . . . right! How's that working out for you?
Defining the current condition of the markets to be a result of Libertarian political ideology would be highly inaccurate.
Laissez faire is the very essence of libertarianism. Libertarians have a great understanding of how govt intervention can distort and impede the markets. They have zero understanding of how corporate intervention in the political process, distorts the political process, interferes in the functioning of markets, consolidates power and money in fewer hands, and favors oligopolies while disempowering small business.
Exactly. Free markets implies the chance of failure. The gov of the last couple decades has prevented this. We have no free market. _________________ -Dac
Winners never quit and quiters never win, but those that never win and never quit are idiots.
Joined: Apr 27, 2007 Posts: 4353 Location: The Great Sonoran Desert
Posted: Mon Apr 07, 2008 7:09 pm Post subject: Re: Housing & Economic Collapse - In Progress
Daculling wrote:
Free markets implies the chance of failure.
BIG TIME FAILURE....
Thanks Mish!!!! _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
Joined: Oct 23, 2004 Posts: 5913 Location: New Jersey
Posted: Mon Apr 07, 2008 7:22 pm Post subject: Re: Housing & Economic Collapse - In Progress
For those of you who don't know the Fed is not only responsible for enforcing banking regulations but providing guidance to the joint federal agancy in charge of financial regulation.
Therefore if they say, for example, mortgage lending standards are too liberal, they could issue a directive to guide back speculative lending.
Greenspan seems to have forgotten he was in charge of enforcing banking and lending regulations. How convienient.
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