Greenspan - On Public Sector Fear And Uncertainty (Reagan, premium, Dodd)

[Wapasha]

Alan Greenspan wrote an article concerning the fear both consumers and businesses are experiencing, and how it affects our economy.

Greenspan: FEAR undermines America's recovery...

A lot of us here, have been trying to explain to the left, that the policies and the regulations being signed into law by 0bama, are causing the private sector to withdraw, contract, and become as small a target as possible, to avoid the wrecking ball of this democrat lead government.

The private sector has no clue what their taxes will be in 2011, and the democrats have had two years to decide, but chose to adjourn like political cowards. Then they have the nerve to act confused as to why the economy is not picking up.

Greenspan addressed this uncertainty:

The instinctive reaction of businessmen and householders to uncertainty is to disengage from those activities that require confident predictions of how the future will unfold.

Greenspan rambles for a while, but towards the end he starts naming names:

But an indeterminate amount of the remaining shortfall reflects both a direct and indirect hobbling of vital financial intermediation. It is going to take years to address the unprecedented complexity of final rulemaking required in the massive Dodd-Frank bill. The inevitable uncertainty engendered will inhibit financial innovation and intermediation, and render the rules that will govern a future financial marketplace disturbingly conjectural. This is bound to have a significant impact on economic growth. Business planners must now confront a much wider set of scenarios that could affect the profitability of contemplated long-term commitments. This wider set, of necessity, increases risk premiums on illiquid assets.

In other words, the economy will be in a flux of uncertainty for a decade or more because of the Dodd-Frank financial bill. This god awful mess of a financial regulation will most likely be responsible for many unintended consequences, and why not, it was authored by two of the same people responsible for the mess we are in.

[kovert]

If his Friedman worshiping @zz would've actually done his damn job in the 1st place instead of living in an Ayn Rand wet dream, we wouldn't have had the crisis in the 1st place.

Originally Posted by kovert

You really need to do your homework because the man who was at the center of it all, The Maestro himself, Alan Greenspan admitted it was his ideology that was wrong. Broaden your mind and realize reality is not everything Glen Beck tells you.




Greenspan in his own words.

I am already well aware of the cult of Beck's flagrant disregard for facts, but in this non-Fox based reality:

"The subprime boom was led by investment banks and mortgage brokers, not by government-sponsored enterprises."

Originally Posted by kovert

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And the Man Himself, Mr. Alan:
"The tough talk reflected a widening sense that some of Greenspan's apparent successes in managing the economy from 1987 to 2006 were in fact illusory, that they came at the cost of building the biggest credit bubble in world history."
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"He noted that the immense and largely unregulated business of spreading financial risk widely, through the use of exotic financial instruments called derivatives, had gotten out of control and had added to the havoc of today’s crisis. As far back as 1994, Mr. Greenspan staunchly and successfully opposed tougher regulation on derivatives.

Many Republican lawmakers on the oversight committee tried to blame the mortgage meltdown on the unchecked growth of Fannie Mae and Freddie Mac, the giant government-sponsored mortgage-finance companies that were placed in a government conservatorship last month. Republicans have argued that Democratic lawmakers blocked measures to reform the companies.

But Mr. Greenspan, who was first appointed by President Ronald Reagan, placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more “paper.”"