Ex-Fed chair Greenspan says government needs new power, laws an...

I am no expert in the crisis at hand but Greenspan had to know that his direct action of keeping interest rates at or around zero percent would eventually lead to a collapse of the economy in general. Micro economics 101 dictates that supply is generated from demand. Once demand has been met there is a fall in prices to generate new demand. It is a cycle that repeats itself. In this instance, we have a super heated marketplace generated by Wall Street that is in collusion with the banking industry to give out money to anyone with a pulse. Wall Street and the Fed knew that one day someone would be left holding the bag from all the fall out once interest rates HAD to climb to stave off rampant inflation. So Wall Street became very savvy in their ability to hide these junk loans by presenting them in mortgage back securities to foreign investors. That was one way to help soften the eventual blow out liquidation in market price devaluation. Who cares about foreign investor’s right? The other fall guy for this flagrant corruption over the last several years is you, me, the tax payer. We will be held accountable for flipping this bill for generations. No accountability from Wall Street, no accountability from the Federal Reserve, once again, this is a cycle that will repeat itself until the system is changed. Free market economies do not work unless there is strict oversight from a regulatory party that has no vested interest in capitalizing from rising fortunes. This party must be neutral at all cost. Regulation does not mean profits will dwindle and innovation will diminish. It will however hinder the super rich from becoming super, super rich as greed is the inherent nature of capitalism. And this greed is what has us all in a very unfortunate position.

chris wrote:

I am no expert in the crisis at hand but Greenspan had to know that his direct action of keeping interest rates at or around zero percent would eventually lead to a collapse of the economy in general. Micro economics 101 dictates that supply is generated from demand. Once demand has been met there is a fall in prices to generate new demand. It is a cycle that repeats itself. In this instance, we have a super heated marketplace generated by Wall Street that is in collusion with the banking industry to give out money to anyone with a pulse. Wall Street and the Fed knew that one day someone would be left holding the bag from all the fall out once interest rates HAD to climb to stave off rampant inflation. So Wall Street became very savvy in their ability to hide these junk loans by presenting them in mortgage back securities to foreign investors. That was one way to help soften the eventual blow out liquidation in market price devaluation. Who cares about foreign investor’s right? The other fall guy for this flagrant corruption over the last several years is you, me, the tax payer. We will be held accountable for flipping this bill for generations. No accountability from Wall Street, no accountability from the Federal Reserve, once again, this is a cycle that will repeat itself until the system is changed. Free market economies do not work unless there is strict oversight from a regulatory party that has no vested interest in capitalizing from rising fortunes. This party must be neutral at all cost. Regulation does not mean profits will dwindle and innovation will diminish. It will however hinder the super rich from becoming super, super rich as greed is the inherent nature of capitalism. And this greed is what has us all in a very unfortunate position.

So now we know the shit went from top to bottom....Is it the tax payers fault?

Does anyone want another loan with a hook in it?

you are asking if this is the tax payers fault? I would say it is a personal accountability fault. Look, it isn't the governments job to hold its citizens hands when they are making any decision personal or otherwise. But the governemnt specifically the FED who overseas monetary policy was very well aware that a great majority of the citizens who purchased homes on loans with ARMS that didn't require a significant down payment was recipe for disastor. These same people who are in default or simply walked away from their loans altogether should have known better as well but they turned a blind eye to the fact that once interest rates would rise, their mortgage rates would do so accordingly forcing their monthly payment structure to be substantially outside their means. There was a contract and with all major purchases you need to read the fine print. That is the publics responsibility. However, the larger question at hand is the fact that Greenspan in all his economic mysticism, should have blown the whistle knowing very well that the mortgage sector would implode after all that "free" money dried up. That is where I see gross negligence on behalf to defraud the public. The public should have done their homework though and not bought into the hype of the "american dream" without questioning the fine print.
And now, once again, the tax payer will bail out the short sided executives, their arrogance and greed, and suffer a long economic recession until fiscal policy is back in order.
Unfortuntley, the quick buck artists with all their flashy returns won this time around. And with that, look where it has gotten us today.