Alan Greenspan uber FAIL

[mazi]

http://www.nytimes.com/2008/10/24/business/economy/24panel.html?_r=2&em&oref=slogin&oref=slogin

Gather your torches my frnds

[88Mariner]

Re: Alan Greenspan uber FAIL

Greenspan was right. Notice;

Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,”

Generally, any business operates in a manner that will enable its survivalin the market; the lending institutions in question acted to thier own detriment. As an analogy, it would be like trusting a nuclear power plant engineer to wear lead vests while working, except he decided it was too heavy. It is the businesses themselves that were acting irrationally, and deceptively doing so, to the detriment of both a very intelligent man, and to the state of our economy.

[Miroslav]

Re: Alan Greenspan uber FAIL

^^ It gets grayer than that. You could argue that the businesses were acting quite rationally, within their limited scope of activities. "Rational" means profit maximizing, which is exactly what they did. It was rational for the real estate agents to push people through who couldn't repay, because they got a commission. It was rational for non-bank entities to make the loans, because they could securitize the shit and get it off their own books - and make money in the process. It was rational for the credit rating agencies to rate the top tranches AAA, because they get paid by the very firms that they rate.

Ideally, an appropriate level of government oversight should prevent such short-sighted "rationality" from going too far. And it didn't.

It's an extremely gray area and there is actually still a lot of contention as to whether bubbles originate from government intervention in free markets, or whether it is an inherent periodic feature of free markets themselves. Truth is probably somewhere inbetween.

[mazi]

Re: Alan Greenspan uber FAIL

its simply greed. its part of human behavior that is why markets need regulators.
to compare with simply a led vest doesn't do it justice. i dont believe markets will regelate themselves since i dont believe in people.
ps.
ideologies are dangerous.

[88Mariner]

Re: Alan Greenspan uber FAIL

greed is good. it drives innovation, productivity, creativity; the desire to make and create and keep wealth. everyone is greedy, there is no way around that. the problem arises when the pursuit of a goal is actually against one's own rational self-interest. for example, I want to be a great baseball player, so I take steroids; it might help me achieve my goal, but it's clearly detrimental to a higher priority; my own health. If banks and lending associations elevate the making of money as higher than the survival and viability of thier business, to me, this is irrational.

[runningman]

Re: Alan Greenspan uber FAIL

OK Gordon Gekko^^^

http://www.telegraph.co.uk/finance/3253999/Oct-24-1929-Wall-St-crash.html

Watch out for Monday.

[88Mariner]

Re: Alan Greenspan uber FAIL

Gordon Gekko was right; and he proves my point due to how he made his decisions apropos Bud Fox's father's company.

[Miroslav]

Re: Alan Greenspan uber FAIL

greed is good. it drives innovation, productivity, creativity; the desire to make and create and keep wealth. everyone is greedy, there is no way around that. the problem arises when the pursuit of a goal is actually against one's own rational self-interest. for example, I want to be a great baseball player, so I take steroids; it might help me achieve my goal, but it's clearly detrimental to a higher priority; my own health. If banks and lending associations elevate the making of money as higher than the survival and viability of thier business, to me, this is irrational.

Fair enough, but the point remains that the constituents in the marketplace had strong incentives to take the actions they did - and so they acted accordingly. That's all that "rational" really means from an economic standpoint. Correspondingly, greed may manifest itself in ways that we see as favorable or unfavorable, depending upon the actions resulting from the underlying incentives. The question is: who/what defines and modifies the incentives over time? Government or free market trends?

[runningman]

Re: Alan Greenspan uber FAIL

I wasn't knocking it I was just calling it GG

[88Mariner]

Re: Alan Greenspan uber FAIL

^ rumors been around that Fox is going to produce Wall Street 2.

[runningman]

Re: Alan Greenspan uber FAIL

with Sheen and Douglas?? If so that would be amazing.

[88Mariner]

Re: Alan Greenspan uber FAIL

no no. just douglas. no word on charlie sheen. it'll be when douglas gets out of jail.