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"Markets are becoming aware of the fact that the decline in house prices is not stopping. I have no particular regrets. The housing bubble is not a reflection of what we did, as it is a global phenomenon."
Alan Greenspan, November 23, 2007 (as seen at PrudentBear.com)
Irresponsibility (Despair.com)
No single raindrop believes it is responsible for the flood.
Of course, Greenspan's "responsible" management of the US Economy is hardly a single raindrop. In order to do it justice the quote should probably say:
No single failed dam believes it is responsible for the flood.
FEMA: What to Do Before a Dam Failure
Know your risk. Do you live downstream from a dam? Is the dam a high-hazard or significant-hazard potential dam?
The risk was clearly high. We all lived downstream from the significant-hazard liquidity dam. The cleanup efforts are turning it into something potentially worse.
Find out who owns the dam and who regulates the dam.
Technically, we all own the dam. Greenspan regulated it but he handed that "responsibility" over to Bernanke. "A global phenomenon" is apparently now repsonsible for OUR housing bubble. Hopefully the global phenomenon has even more prosperity planned for us.
Once you determine that you live downstream from a high-hazard or significant-hazard potential dam and find out who owns the dam, see if a current EAP is in place for the dam. An EAP is a formal document that identifies potential emergency conditions at a dam and specifies preplanned actions to be followed to reduce property damage and loss of life.
The property damage has been enormous so far. I can only infer the EAP based on the responsible parties' actions. In 2002, there was talk of helicopters and easy money. This was followed up by denial and/or subprime containment speeches. Then there was sheer unadulterated panic in the form of intermeeting rate cuts and emergency Bear Stearns action. Now these same responsible parties are telling us that the risk of a serious economic downturn has diminished, again. There's been very little talk of actually repairing the dam. Most discussion centers on how to get us even more liquidity (tax rebate checks and other forms of stimulus).
If there is a dam failure or an imminent dam failure and you need to evacuate, know your evacuation route and get out of harm's way.
Most of the evacuation routes are congested. Too many people are trying to get out of harm's way simultaneously (see oil and gold prices). Greenspan told us in 1966 that "The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves." Was that an observation or a promise?
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
16 hours ago
4 comments:
Stag,
No regrets???? Inconceivable. Seriously, now THAT is a conundrum.
Two thoughts. 1) The king can do no wrong. 2) He who has the printing press makes the rules.
MAB,
Passing the buck is to deny responsibility.
Printing the buck is to deny responsibility.
Greenspan sees lower oil - temporarily
http://www.canada.com/montrealgazette/news/business/story.html?id=4ea62951-bcb4-4312-b493-3ff9484379d8
Although Greenspan maintains that it's impossible to know exactly when a bubble is being created until it bursts...
People were chewing on 0% teaser loans while forming puckered expressions on their faces. Then a pink (slip) surface appeared and began to expand. Other than that though, the housing bubble was impossible to see.
Stag,
http://www.prudentbear.com/index.php/BearsLairHome
Another interesting pov from Hutchinson. I think it can be argued that the abandonment of the gold standard was the the spring board for our over grown financial services industry. Manufacturing and output had no chance against the spreadsheets and the printing presses.
I continue to believe that financialization is a false prosperity. One reason is that it diverts effort from innovation and production to money creation for the sake of money creation.
How and why we deluded ourselves into believing that rising house prices were/are wealth is a mystery to me. It's all about the spread sheet.
MAB,
think it can be argued that the abandonment of the gold standard was the the spring board for our over grown financial services industry.
Everyone wanted to be a bank. Times are changing though.
http://www.washingtonpost.com/wp-dyn/content/article/2008/05/19/AR2008051900830.html
In the face of a stormy outlook for consumer spending, Target has battened down the hatches. To reduce its exposure to shaky credit markets, the company plans to sell 47% of its credit-card business to JPMorgan Chase for $3.6 billion.
That's funny. This article is only a month old. Surely the storm is passing. In one more month we'll be getting the start of our "second half of year" recovery like we were told. Why batton down the hatches for all the sunshine headed our way?
I continue to believe that financialization is a false prosperity.
Using the power of the thesaurus I'm once again thinking of changing my blog's name.
Our Economic, Fiscal, and Monetary System Expansion Is an Artificial, Bogus, Concocted, Counterfeit, Crooked, Deceitful, Deceptive, Delusional, Dishonest, Fictitious, Groundless, Hollow, Illusional, Imaginary, Misleading, Phony Sham of Affluent, Auspicious, Flourishing Prosperity
I'd probably have to change my name though to do it justice.
The Sometimes Right Honourable Stagflationary Mark, Founding Member of [Blog Name, see above] and Heckler of United States Governmental Administrative Affairs and Heckler of The Federal Reserve and other Quasi-Governmental Agencies
His Illusionary Excellency Stagflationary Mark would be acceptable in all informal situations.
Stag Mark would be acceptable in all emergency/crisis situations.
Needless to say, Stag Mark is and has been acceptable and should continue to be acceptable into the distant future. What a relief that must be to all parties concerned!
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