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Greenspan "shocked" at credit system breakdown
- Thread starter Gringinho
- Start date
Pabst defending a Jewish Central Banker would be like Alan Dershowitz arguing on behalf of the NRA but when ET sentiment is shorting Greenspan, Pabst knows he should be a buyer.
A few facts/observations.
1. If not for Greenspan its doubtful there would still be Index futures and options. Landis should know that. After the 1987 crash the S&P futures market was as popular in the media and Congress as Dick Fuld is today. Program trading and portfolio insurance were the CDO's of their day. Greenspan lobbied hard to Congress on the need for risk transference via futures. If he'd been anti-futures or had blamed futures for the crash us traders would be without a livelihood.
2. To hear people who applaud Bernanke's rate cuts now bemoan Greenspan's rate cuts is RIDICULOUSLY DISINGENUOUS. Think this economy sucks? The post tech collapse, post 9/11 economy SUCKED WORSE. If anything Greenspan was TOO RESTRICTIVE the last half of 2000. By 2003 he was RAISING rates-he raised them FOURTEEN TIMES before he left the Fed in 2006.
3. No one has the BALLS to mention the REAL elephant in the room. It's FDIC insurance. If you owned a bank and sent your depositors a memo last year saying, "housing loans are risky, buying securities could be fatal so instead we're buying Treasuries, hence our offered CD rate will be LOWER than anyone else's." What do you MORONS think the response would be from your depositors? They'd tell you to F...off. They'd say, "My deposit is INSURED, I don't care about the risk your institution takes. That's YOUR problem. I WANT MY YIELD! Or I'll place my account at Citi."
4. If these troubled lending institutions were partnerships instead of publicly traded corporations PERHAPS they would've been more prudent with risk. To ASSUME that as fact IGNORES the trader TRUISM-People add to losing trades! Do you think ONLY US manage positions like panicky reckless gamblers? Like everyone else the Dick Fulds of the world thought if they cost averaged a bounce would allow them an out. Didn't happen.
5. When an asset collapses in price and there's massive loans tied to that assets viability then no matter how the liability is spread around the losses are STILL GOING TO BE EXTRAORDINARY. If a Hurricane wipes out Miami no matter if one or a thousand insurers wrote policies the dollar damage IS THE SAME AMOUNT.
Those who play the blame game usually have the self reflection capability and intellect of ants......
A few facts/observations.
1. If not for Greenspan its doubtful there would still be Index futures and options. Landis should know that. After the 1987 crash the S&P futures market was as popular in the media and Congress as Dick Fuld is today. Program trading and portfolio insurance were the CDO's of their day. Greenspan lobbied hard to Congress on the need for risk transference via futures. If he'd been anti-futures or had blamed futures for the crash us traders would be without a livelihood.
2. To hear people who applaud Bernanke's rate cuts now bemoan Greenspan's rate cuts is RIDICULOUSLY DISINGENUOUS. Think this economy sucks? The post tech collapse, post 9/11 economy SUCKED WORSE. If anything Greenspan was TOO RESTRICTIVE the last half of 2000. By 2003 he was RAISING rates-he raised them FOURTEEN TIMES before he left the Fed in 2006.
3. No one has the BALLS to mention the REAL elephant in the room. It's FDIC insurance. If you owned a bank and sent your depositors a memo last year saying, "housing loans are risky, buying securities could be fatal so instead we're buying Treasuries, hence our offered CD rate will be LOWER than anyone else's." What do you MORONS think the response would be from your depositors? They'd tell you to F...off. They'd say, "My deposit is INSURED, I don't care about the risk your institution takes. That's YOUR problem. I WANT MY YIELD! Or I'll place my account at Citi."
4. If these troubled lending institutions were partnerships instead of publicly traded corporations PERHAPS they would've been more prudent with risk. To ASSUME that as fact IGNORES the trader TRUISM-People add to losing trades! Do you think ONLY US manage positions like panicky reckless gamblers? Like everyone else the Dick Fulds of the world thought if they cost averaged a bounce would allow them an out. Didn't happen.
5. When an asset collapses in price and there's massive loans tied to that assets viability then no matter how the liability is spread around the losses are STILL GOING TO BE EXTRAORDINARY. If a Hurricane wipes out Miami no matter if one or a thousand insurers wrote policies the dollar damage IS THE SAME AMOUNT.
Those who play the blame game usually have the self reflection capability and intellect of ants......
Quote from Pa(b)st Prime:
...
1. If not for Greenspan its doubtful there would still be Index futures and options. Landis should know that. After the 1987 crash the S&P futures market was as popular in the media and Congress as Dick Fuld is today. Program trading and portfolio insurance were the CDO's of their day. Greenspan lobbied hard to Congress on the need for risk transference via futures. If he'd been anti-futures or had blamed futures for the crash us traders would be without a livelihood.
.....
Wow, I had no clue about this. This alone definitely earns my gratitude and should ear gratitude of countless many.
It is weird to think of a time when there were no electronic index futures, and no index futures at all.
Quote from RedDuke:
Wow, I had no clue about this. This alone definitely earns my gratitude and should ear gratitude of countless many.
It is weird to think of a time when there were no electronic index futures, and no index futures at all.
I'll give you one further. On another thread someone was saying Obama is gifted because he surrounds himself with "smart guy's like Larry Summers" Well it was Summers who while at Harvard advocated TRANSACTION TAXES to hamper futures. Summers BLAMED futures. Greenspan was about the only non-Chicago voice in Washington defending our markets....
Well, ya think Uncle Bernie is any better then? Greenspan is peanuts compared to this dude. Bernanke will push the interest rate down to zero. You just watch. This country will go through a monster inflation that you or I can't even fathom.Quote from eagle:
At the time when the tulip mania was building up in the housing market, Greenspan was giving green light to banks and citizens by aggressively cutting interest rate, instead of calming he continued to argue that there wasn't a bubble in housing market.
Quote from saliva:
Well, ya think Uncle Bernie is any better then? Greenspan is peanuts compared to this dude. Bernanke will push the interest rate down to zero. You just watch. This country will go through a monster inflation that you or I can't even fathom.
Exactly. At least when Greenspan was cutting Oil was $25, Gold $275, Corn $1.90. Few foresaw inflation in 2002. The risk then APPEARED to be depression. This time around it's pretty OBVIOUS that there's bona fide inflationary pressure on prices.
Quote from Pa(b)st Prime:
I'll give you one further. On another thread someone was saying Obama is gifted because he surrounds himself with "smart guy's like Larry Summers" Well it was Summers who while at Harvard advocated TRANSACTION TAXES to hamper futures. Summers BLAMED futures. Greenspan was about the only non-Chicago voice in Washington defending our markets....
When ever I read about transaction tax, I just want to yell: "Are you fu..ng kidding me? This will make trading obsolete since you would only be able to buy, hold and pray to overcome transaction costs.
The simple math for ES is ($50* 950 (let's take this index value) ) is $47,500 value of one contract. Slap 1/4 of 1 percent transaction tax on it (like Defazzio recently proposed) and to buy and sell it we would have to pay $118.75 + 118.75.
This is pure madness. And they wanted to apply it to any financial product.
Another thumb up to Greenspan for opposing this shit.
Quote from gnome:
That also created a carry trade. And worse yet, the players thought they could lock in the spread and have their position "insured" with CDSs... So as it appeared there was no way to lose on the deal, they pushed the peddle to the metal on leverage.
Except... the "insurance" was all based upon, "I can't pay you until my counterparty pays me". Probably will go down in history as the all-time house of cards... Oops...
Great wrap up of the whole mess in three sentences.
I am really disappointed that Greenspan just won't own up and say, "Alright, I fucked up. The cost of money should never be as low as I made it. Ever."
Instead he flip flops on his lifelong support of freedom and free markets by calling for more regulation. Sad.