Greenspan says Government Activism Hurting Recovery

ARealConservative said:

that's my point. debt creation itself is far easier, and the desire to create debt is directly tied to great society and new deal programs. so these programs can be blamed for a good portion of every bubble that has come about in the last century.

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How is the desire to create debt tied to the great deal and great society?

US government debt to gpd was stable from around the early 60s to the 80s when it increased dramatically during the Reagan admin. Even total US debt (government, corporate and personal) didnt start to sky rocket untill the 80s. I doubt the US during that time was in thrall to the welfare state (Reagan, the Bush`s admins)

USA_1 said:

People in denial will never learn from their mistakes. They didn't learn from the Savings and Loan collapse and repeated history. Insanity is doing the same thing over and over and expecting different results.

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Exactly. Continuing to claim government isn't causing these issues, or is somehow able to predict and prevent them despite the evidence to the contrary, is insane.

Nearly ever claimed cause of the S&L crisis involves government inexperience, inablity to enforce their own laws, their improper de-regulation, Government tax manipulation, or the moral hazards created by (like always) federall guaranteeting and overseeing risky lending. It's not that they aren't decent people that work a fair amount...it's that central planning is now and always will be dangerous.

Any idiot knows that if you allow someone to believe someone else is "responsible", they will act irresponsibly. They won't even *try* to act resopnsibly...why should they? It's been delgated, and those "other people" will keep them in check. But wait, I can make millions if I make this risky investment...well, it's certainly worth trying for millions right? I mean, government will stop me if I do something wrong, since they are responsible (according to you), right? How the **** can Alan Greenspan be sufficiently or logistically incentivized to understand every player in the maket and ever action they take? It is indeed, insane. That's why individual ownership and accountability always win out.

And the worst possibly type of system to take on critical, hard, complicated, responsibility, is CENTRAL PLANNING.

What do you think real estate investors thought when they saw the fed bail out the S&L crisis? Hey neat, we can do this again and big daddy will bail us out.

As for hindsight. I work in the housing sector and could see exactly what was happening and that the collapse was inevitable. Building 20 years worth of homes in three years was the giveaway.

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So I assume you took measures to insulate yourself from it? If so, that's exactly how it's supposed to work. Notice it wasn't government that saved you, they only made it worse for everyone else.

Lord Tammerlain said:

How is the desire to create debt tied to the great deal and great society?

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It’s a simplification, the programs actually desire to spend more money, not create debt. And hindsight has shown us that the money will get spent regardless of if the money exists to spend.

US government debt to gpd was stable from around the early 60s to the 80s when it increased dramatically during the Reagan admin. Even total US debt (government, corporate and personal) didnt start to sky rocket untill the 80s. I doubt the US during that time was in thrall to the welfare state (Reagan, the Bush`s admins)

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GDP includes government spending, so I reject the utility of such comparisons.

ARealConservative said:

It’s a simplification, the programs actually desire to spend more money, not create debt. And hindsight has shown us that the money will get spent regardless of if the money exists to spend.



GDP includes government spending, so I reject the utility of such comparisons.

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How can you reject the utility of such comparisons when the figures for the amount of debt created in just the last 30 years in comparison to GDP has doubled. No amount or lack of government spending would be able to paper that number over

Lord Tammerlain said:

How can you reject the utility of such comparisons when the figures for the amount of debt created in just the last 30 years in comparison to GDP has doubled. No amount or lack of government spending would be able to paper that number over

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I’m not rejecting the comparison from the 60’s to the 80’s as being artificial. Spending in the 80’s under Reagan was absolutely ridiculous and the love he receives sickens me to this day.

What I reject is the relationship of gdp to debt as a meaningful study of a healthy economy. Massive spending will allow gdp to increase massively. If you are spending and borrowing, the comparison of debt to gdp will stay relatively stable because they are so closely related

ARealConservative said:

I’m not rejecting the comparison from the 60’s to the 80’s as being artificial. Spending in the 80’s under Reagan was absolutely ridiculous and the love he receives sickens me to this day.

What I reject is the relationship of gdp to debt as a meaningful study of a healthy economy. Massive spending will allow gdp to increase massively. If you are spending and borrowing, the comparison of debt to gdp will stay relatively stable because they are so closely related

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Ok I understand

I will provide a link however that shows a massive increase in debt to GDP (total debt)

http://theeconomiccollapseblog.com/...0/07/Total-US-Debt-As-A-Percentage-Of-GDP.jpg

I think that graph will show why the 80s felt good, and so did the 2000s. It does not reflect the bubble of the 90s though. It is purely part of the information required to view and economy not the entire picture

A great deal of the housing crisis was caused by The Community Reinvestment Act it is a federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.

By following these rules loans were made to people who otherwise would never qualify and it bit us in the ass.

We also have to blame Unions, over spending on projects that were not needed and produced nothing but debt.

We now can blame a great deal of the failure to recover on the waste of nearly all the stimulus money on projects that yielded little or no positive results.

Best example is the Cash for Clunkers nonsense that sold mostly Toyota cars and not the ones that were needed to sold. Killed the used car market, and cost over $28.000 per car sold.

This in only a small list of mistakes problems and I don't think Greenspan came up with any of them.

Councilman said:

A great deal of the housing crisis was caused by The Community Reinvestment Act it is a federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.

By following these rules loans were made to people who otherwise would never qualify and it bit us in the ass.

We also have to blame Unions, over spending on projects that were not needed and produced nothing but debt.

We now can blame a great deal of the failure to recover on the waste of nearly all the stimulus money on projects that yielded little or no positive results.

Best example is the Cash for Clunkers nonsense that sold mostly Toyota cars and not the ones that were needed to sold. Killed the used car market, and cost over $28.000 per car sold.

This in only a small list of mistakes problems and I don't think Greenspan came up with any of them.

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That's a bunch of baloney. Only 6% of the risky loans were CRA. It had nothing to do with the bubble or it's bursting. Do some research instead of depending on tired, old, debunked partisan talking points.
It's really getting pathetic.

The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods.[7] The Act mandates that all banking institutions that receive FDIC insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operation as per Section 802(b) and Section 804(1)) in all communities in which they are chartered to do business.[3] The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.[8]

The law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution.[3][4] An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.[6][9]

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