Friday, September 07, 2007

Greenspan: It's LTCM and the Bank Panic of 1907 All Over Again

According to this article, Greenspan likens the turmoil in today's markets to that of 1987 and 1998, when LTCM collapsed, and the bank panic of 1907. Yawn. Is it really a surprise to anyone that now that Greenspan is "retired" he has been coming clean on the housing bubble he helped to create?
Former Federal Reserve Chairman Alan Greenspan said the current market turmoil is in many ways "identical" to that which occurred in 1987 and 1998, when the giant hedge fund Long-Term Capital Management nearly collapsed.

"The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987, I suspect what we saw in the land-boom collapse of 1837 and certainly [the bank panic of] 1907," Mr. Greenspan told a group of academic economists in Washington, D.C., last night at an event organized by the Brookings Papers on Economic Activity, an academic journal.
Thanks Alan, you're a real help.

7 Comments:

Blogger Matthew said...

Dear Sir Alan,

You are well outside your league to be commenting about the financial markets sir. You are, after all, a politician first and foremost and a banker secondly. Your run as Chaiman of the Fed ended long ago, thankfully, and now we are left to clean up your mess.

Nothing you say can distract from the fact that your tenure at the Fed was about 10 years too long, so please shut the hell up and enjoy your ill gotten retirement. The more you speak, the more damage you do to your credibility and status and the more we are reminded what an incompetent, short-sighted and greedy Fed Chairman you really were.

Sep 9, 2007, 7:53:00 AM  
Blogger Lance said...

I don't know ... I enjoyed an unprecented prosperity while Mr. Greenspan was Chair of the Fed. In fact, most Americans did.

While he was on his watch the economy prospered beyond our hopes previously, he steered us clear of a stock market crash, and brought about a quick recover from a short recession. Why the sour grapes? If it's the price of housing, imagine how much worse it would have been if the economy hadn't been doing well and all the new construction that the economy fostered hadn't been "constructed". Prices would be even higher than they are now.

Sep 9, 2007, 9:52:00 AM  
Blogger Marinite said...

If it's the price of housing, imagine how much worse it would have been...Prices would be even higher than they are now.

Uh, Greenspan inflated both the NASDQ and Housing bubbles.

Do you think an economy based on inflating bubbles is healthy?

Sep 9, 2007, 11:22:00 AM  
Blogger marin_explorer said...

"...the economy prospered beyond our hopes previously, he steered us clear of a stock market crash..."

...and this excessive liquidity merely forestalled one market downside for even nastier results. Sure, it all looks very lucrative until the credit party turns out the lights and everyone staggers blindly into the darkness.

Sep 9, 2007, 12:50:00 PM  
Blogger Matthew said...

Lance,

Wrong fella... I don't think so..

Thanks to Sir Alan's inflationary practices, you've got most middle class / income Americans hocked up to their eyeballs despite the fact their wages have been relatively flat for years. You / we also have an anemic savings rate in this country thanks to war waged on savers by Sir Alan and his banking buds. And now, you have the dollar slowly eroding for over a year now and it's just starting it’s downhill slide.

Alan was a politician and did what was necessary to keep himself employed and in the good graces of the administration he was serving under at the time. He also helped orchestrate and fuel the largest wealth transfer in the history of this country while his banker and hedge fund bunds made more money in the last 10 years than the previous 50 or so combined.

Your "I've got mine attitude" is one of the many problems that reared it's ugly head under Sir Alan and one our children will be deal with in slay in the years ahead.

You also need to study historic housing prices and what the drivers are.. High unemployment would not result in high home prices.. quite the opposite as we'll likely see in the next few years as this thing unwinds..

Sep 9, 2007, 2:03:00 PM  
Blogger J at IHB and HFF said...

Hello. LTCM Crisis was 1998, not 1987. Greenspan is not retired; see his current financial conflict of interest in "Greenspan Needs YOU to Bail HIM Out?" ( http://tinyurl.com/29vetp ).

Sep 9, 2007, 2:47:00 PM  
Blogger mrlmv said...

Marinite - you are spot on. Greenspan was far more effective as fed chairman under Clinton than he was under Bush. I suppose we are lucky that the smart Fed policy under Clinton was to be oppositional. Well that and it represented rational policy.

As an enabler under Bush all he did was flip 180 on a bunch of issues - Good for the Republicans - bad for the economy long term..

I find it almost comical about how uncritical the financial industry has been of Greenspan - once he established his rep in the early to mid 90's the man could do no wrong...

Sep 10, 2007, 1:31:00 PM  

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