Comments: Did Alan Greenspan blow the bubble that blew up the world?

reference to the greenspan put/bubble starts before 2000

Deutsche Bank: If The Fed Is Concerned About Popping Its Asset Bubbles, It Is 15 Years Too Late

Lot of the Greenspan cheap money the last decade went to private equity companies, allowing them borrow for corporate take-over, plunder the victim and then IPO the victim ... with the victim carrying the original loan (analogous to real-estate speculation flipping ... except in real-estate flipping the original loan is payed off ... in reverse-IPO/re-IPO, the new "buyer" not only takes out a new loan for the purchase, but also assumes existing mortgages).

Lot of the real-estate market was enabled by being able to pay for triple-A ratings (when the rating agencies knew they weren't worth triple-A). This unlocked huge amount of money in places like large retirement & sovereign funds (restricted to dealing in triple-A) ... significant enabler in the over $27T in toxic CDOs done during the bubble.

Posted by Lynn Wheeler at June 27, 2013 09:15 AM

I'm curious: why, at this point, would you be a fan of Alan Greenspan?

He's the epitome of everything that went wrong with our financial system: a demagogue who substituted ideology for critical thought. He spoke as if he were an entrepreneur who understood the creation of real wealth by use of the free market, but whose real power and influence came from being a bureaucrat with the keys to the largest fiat money machine in the history of mankind.

Basically the man's one saving grace, as I see it, is that he ultimately had the humility to admit to the world that the guiding principle of his administration was wrong. But a public repentance is barely even a start on repairing the damage he did.

Given your own rather hard-nosed and quantitative approach to financial problems, I'm really curious about what would make you a fan. It would be nice to see a future post about this: maybe there's something in Greenspan's history that I'm not aware of.

Posted by Glyph at June 27, 2013 11:20 AM

Figures get the credit and the blame for being in the path of trends that were already in motion.

Posted by Joe Bob at July 11, 2013 02:33 AM
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