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Alan Greenspan, the former Fed chief who some hail as the greatest central banker of all time, tells 60 Minutes that he didn't realize the sloppy mortgage lending practices of recent years could hurt the larger economy until recently, according to the Washington Post today. The 60 Minutes interview with Greenspan is scheduled to run on Sunday evening at 7 (EDT).Greenspan is back in the public eye as he promotes his new memoir, "Age of Turbulence," which is being released Monday. It's a delicious irony that the man who turned on the liquidity spigot in the first place would come out with a book so titled.
But apart from that chuckle, this revelation is unsettling. I'm not sure how arguably one of the most influential Fed
leaders in history could be so short-sighted about the long-term ramifications of his actions (specifically, lowering the interest rate to the lowest point in a generation). I'd like to think these guys are a lot smarter than the rest of us,
with access to the best financial brains available. How is it possible to not realize that unbridled lending will end in
tears?
Hasn't he ever heard the old tropes about paying the piper or the free lunch? Stay tuned for this and other explanations, coming soon to a bookstore near you.
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Reader Comments (Page 1 of 1)
9-13-2007 @ 6:46PM
Ada said...
It wasn't the Fed lowering the interest rate that created the mess, it was the LENDERS lowering their own credit approval standards and introducing absurd mortgage types that have HISTORICALLY created nightmare economic conditions. Tried and true formulas for determining a borrower's credit worthiness were cast aside with criminal negligence. When we do not learn from history, we are..... ???? Yep, doomed to repeat it.
9-13-2007 @ 7:30PM
max said...
Here's something else hardly anyone knows about..dishonest appraisers...you wouldn't believe how many calls we get and the company tells us that they need this amount of money to make it work..they don't care how we get the appraised value....we turned them all down, but there are obviously other appraisers who didn't...I think....
9-13-2007 @ 7:35PM
jmcdonald said...
greenspan is a moron!The dollar is going down! Derivitives, i bet he can't spell it.If you apply the same criteria,pre Reagan,to the economy, we don't have any!
9-13-2007 @ 8:41PM
tom price said...
Greenspan endorsing Bernacke.
Look folks WAKE UP!
The federal RESERVE is NOT federal...sort of like federal express, Never has been and never will be federal. No...not a US government agency, but a private company.
Controlled by the Rockefellers, JP Morgan and European interests, they surely DO NOT have American interests at hand...all on the way for a "NEW WORLD ORDER"
Google "Bilderbergs", "TriLateral Commission", "Council on Foreign Affairs", and on and on. ETC
WAKE UP
9-13-2007 @ 9:35PM
willowreed said...
I saw this coming long ago. I posted my opinion all over the place. Nobody listened.
OF COURSE this idiotic mortgage mess will take its toll on the larger economy!
Its all part of the domino effect starting with the 'consumer.' (In my opinion 'consumers' need to stop consuming and become 'customers' or 'clients' instead. THEY need to raise the bar for ethical banking and business practices in their own lives before any of this chaos will slow down).
argh!
9-14-2007 @ 12:19AM
sparky said...
In my opinion it is high time we stop being consumers and return to the time honored title of "citizens" taking all of the rights and responsibilities therein.
10-18-2007 @ 5:34PM
doofus detector said...
3. greenspan is a moron!The dollar is going down! Derivitives, i bet he can't spell it.If you apply the same criteria,pre Reagan,to the economy, we don't have any!
Posted at 7:35PM on Sep 13th 2007 by jmcdonald
Actually, it is spelled D E R I V A T I V E S ...What an R Tard
9-14-2007 @ 9:02AM
AnyGoodDeals said...
Greenspan lowering the rates didn't cause this situation. It was banks lending to people with bad credit. It was appraisers giving higher than reality appraisals. It was builders and contractors quickly and constantly raising the price of homes. It was realtors selling homes for more than their true value. It was speculators upping the price of homes within minutes of acquiring them. Basically it was a lot of greedy people that caused this mess.
9-14-2007 @ 10:22AM
MarketWatch said...
Banks lending to individuals with bad credit. Appraisors handing out high values. Speculators, realtors, builders .... high risk takers looking for the high pay out. Why should I support a federal effort to "help" those individuals who face impending foreclosure? Is the government going to help people like me? I have a 30-year fixed mortgage on a house purchased in the last 2 years with a price well within my budget. The company I worked for in the building industry has politely laid off more than 40% of staff in the past year and more layoffs are expected. I'm supporting my family by working and paying bills on half my previous salary. No savings, just making it. I read my lending and closing paperwork. I made sure I could handle my loan. No one is talking about helping us.