Earthlinggb's Blog

An Orchestrated Crisis: Part 2

Posted in Finance by earthlinggb on October 9, 2009

John Paulson’s greatest acquisition: Alan Greenspan.

To recap: Greenspan, in January 2008, joined Paulson & Co Hedge Fund and ensured the latter made the largest profits in one year from the subprime crash than ANY hedge fund had EVER made in any one year. $100Billions!!

Yet, read this Washington Post article from 2007 discussing the NUMEROUS times (and they are not exhaustive) it was brought to Greenspan’s attention from 2000 onwards that there were serious issues and he just ignored it all.

Washington Post –

 

By EDMUND L. ANDREWS
Published: December 18, 2007
WASHINGTON — Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.

Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.

But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.

And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.

John C. Gamboa and Robert L. Gnaizda of the Greenlining Institute implored Mr. Greenspan to use his bully pulpit and press for a voluntary code of conduct.

“He never gave us a good reason, but he didn’t want to do it,” Mr. Gnaizda said last week. “He just wasn’t interested.”

Mr. Greenspan, in an interview, vigorously defended his actions, saying the Fed was poorly equipped to investigate deceptive lending and that it was not to blame for the housing bubble and bust.

“I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk,” Mr. Greenspan wrote in his recent memoir, “The Age of Turbulence: Adventures in a New World.” “But I believed then, as now, that the benefits of broadened home ownership are worth the risk.”

Question: Worth the risk to who Alan? CERTAINLY worth it to the people on the inside like yourself who KNEW EXACTLY what was going to happen and then placed MASSIVE multi billion dollar hedges on the market to fall.

“The Federal Reserve could have stopped this problem dead in its tracks,” said Martin Eakes, chief executive of the center for Responsible lending, a NON PROFIT group based in North Carolina. “If the Fed had done its job, we would not have had the abusive lending and we would not have a foreclosure crisis in virtually every community across America.”

 

Mr. Greenspan also contended that the Federal Reserve’s accountants and bank examiners were ill-suited to the job of investigating fraud. (You don’t say? Well Alan that WOULD be the case when the Fed IS the fraud man! – scared to be audited huh? – who the HELL are you trying to kid here? Oh yes, I forgot, the sheep who never ask these questions)

Mr. Gramlich, a Democratic appointee to the Federal Reserve who had spent much of his career studying problems of poverty, saw both great benefits and great perils in the new industry.

 

What alarmed Mr. Gramlich was that many subprime loans were extremely complicated and loaded with hidden risks.

Borrowers were being qualified for loans based on low initial teaser rates, rather than the much higher rates they would have to pay after a year or two. Many of the loans came with big fees that were hidden in the overall interest rate. And many had prepayment penalties that effectively blocked people from getting cheaper loans for two years or longer.

“Why are the most risky loan products sold to the least sophisticated borrowers?” Mr. Gramlich asked in a speech he prepared last August for the Fed’s symposium in Jackson Hole, Wyo. “The question answers itself — the least sophisticated borrowers are probably duped into taking these products.”

THE ANSWER, Mr Gramlich, is SO OBVIOUS I have to think you are either a “shill” or you are IMMENSELY STUPID!

In 2000, Mr. Gramlich privately urged the Fed chairman to send examiners into the mortgage-lending affiliates of nationally chartered banks. Many of them, like Bank of America’s affiliate, had already come under fire from state regulators and consumer groups. Fed examiners, Mr. Gramlich argued, could clean up those practices from the inside.

 

Mr. Greenspan was against the idea. In an interview last week, he said he feared that Fed examiners would fail to spot deceptive practices and inadvertently give dubious lenders what amounted to a government seal of approval.

And there you have it – GREENSPAN BLOCKED EVERY SINGLE MOVE BY ANYONE TO STOP THE ROT BEFORE THE TSUNAMI HIT.

THEN Greenspan leaves the Federal Reserve, joins Paulson & Co and Paulson hit the JACKPOT because GREENSPAN KNEW EXACTLY what was going to happen because HE LET IT!!

In addition, foreign investors were pouring trillions of dollars into American securities. Much of that money, often described as the “global savings glut,” flowed directly into mortgage-backed securities that were used to finance subprime mortgages.

And WHO were these “foreign investors”???? People like the Royal Bank of Scotland for one and Pensions and Personal Investment companies which held OUR life savings!!

Ben S. Bernanke, who succeeded Mr. Greenspan as Fed chairman, is now scrambling to head off a recession. Last week, the Fed lowered its benchmark interest rate for the third time since August, and officials now worry that the subprime crisis has inflicted deep damage on credit markets that could in turn derail the entire economy.

Ho ho ho! And didn’t it do just EXACTLY that! With MORE to come!

Full Article: http://www.nytimes.com/2007/12/18/business/18subprime.html?pagewanted=1&_r=1

 

Subprime crisis: Was Greenspan remiss?
Former Fed governor says Greenspan blocked proposal to crack down on subprime lending practices.
June 9 2007: 2:21 PM EDT

(CNNMoney.com) — Former Federal Reserve Governor Edward Gramlich claims that former Fed Chairman Alan Greenspan blocked a proposal to crack down on subprime lending practices back in 2000, according to The Wall Street Journal……………….
Under current Chairman Ben Bernanke, the Fed has begun reviewing its practices in overseeing holding-company units. On Thursday the Fed will hold a public meeting on regulating subprime lending.

“The crisis will happen again”
8244860.stm

And this from the BBC:
The world will suffer another financial crisis, former Federal Reserve chief Alan Greenspan has told the BBC.
“The crisis will happen again but it will be different,” he told BBC Two’s The Love of Money series.
He added that he had predicted the crash would come as a reaction to a long period of prosperity.
But while it may take time and be a difficult process, the global economy would eventually “get through it”, Mr Greenspan added.
“They [financial crises] are all different, but they have one fundamental source,” he said.

Now let me, if I may, suggest that when Mr. Greenspan speaks of the crises all being different but having one fundamental source, he could not be more correct and well he knows it.

“Mr Greenspan, who when he ran the US central bank was hailed as a man who could move markets, also warned that the world’s financial institutions should have seen the looming crisis.”

He certainly could and did move markets but let me ask you this Mr. Greenspan: YOU were the Fed Chairman. Under YOUR guidance, the banks worked within the markets and if YOU did not flag a problem when YOU entirely manage and are responsible for U.S. Monetary policy (something the Fed do not wish to this day to be monitored or audited by Congress) then how would the financial institutions which are entirely subsidiary to you see the looming crisis? While, in fact, as we have proven, so many times people approached you with concerns and YOU ignored them!
The banks, meanwhile, have done fantastically well out of all of this so, in fact, it is clear as day that it would not even be in their interest to alert you or anyone else to what was transpiring. After all if you can make disgustingly healthy profits while riding the prosperity train KNOWING that you’re doing so on the back of a bubble that, when it pops your “losses” will then be socialised and the taxpayer will end up covering your losses then it’s simply win win win!

“….confronted with long period of prosperity to presume it will continue.”
Now let’s just stop and think about that one for a moment.
Let’s get down to real serious fundamentals here for it is the ONLY way one can see this picture for what it is.
WHO experienced this “prosperity”? Was it the world’s general population made up of approximately 6.5billion people? Most of whom live in squalor?

Now let’s keep our focus here. Mr. Greenspan suggests it is “human nature” as if the entire human race were on some sort of Disney “Prosperity Ride”.

Now, obviously, that isn’t the case. Take a good look around.

He must be speaking of a significantly smaller number of “human beings” who, he feels, are a good indicator of humanity in general I suppose right? According to Mr. Greenspan, “human beings” simply wish to capitalise off other human beings misery. Ask yourself: Do YOU recognise this “human” trait within yourself?
Then ask: How many people do you know who would say they recognise it within themselves?

Then let’s look at what happens when such “prosperity” crashes.
WHO is impacted by it? Ah yes, you and I and most of the 6.5billion people on the planet who never had truly prospered (in the terms Mr. Greenspan speaks of) in the first place.

So then, those who had benefitted truly from the “prosperity”, I guess, would then have lost massively as the financial crisis hit. But NO! The very people who benefitted from the “prosperity” were the very people who continued to prosper (even further) from the crash – as Mr. Soros (for just one solitary example) would say: “I’m having a wonderful crisis”.

Meanwhile, as we have covered, Mr. Greenspan himself benefitted very well thank you very much, on the back of the misery he created for millions during his term as Federal Reserve Chairman.

Then, AGAIN, Mr. Greenspan is very precise in what he says:

“..they (financial crises) are all different..” and of course, they will be. Good God that is simple to recognise why and so transparent AS to why:

1. Each crisis is, after the event, studied for it’s cause. That cause is then found and the issues then dealt with to ensure it cannot be repeated (exactly).
2. The next crisis HAS to be different simply because the issues of any previous crisis, if repeated, would be obvious. The question here is do we take the Alt-A and Option ARM’s as a new crisis? I would argue not but then perhaps that is because I am aware of them whereas the great majority of people have no idea what’s coming.

So “plugging the holes” is what ensures the next crisis must be “different” and as we can see in the CNN article, Bernanke has to be seen as “plugging those holes”.

All different but one fundamental source Mr. Greenspan. That fundamental source has been around for centuries now as you suggest but it is NOT “human nature”, it is just a specific form of human nature which is acquired by a very few but which YOU attempt to associate with the entire human race.

You’re good Alan. But you’re only as good as the people who don’t think allow you to be. To me, you’re nothing more than a corrupt piece of garbage – one of the few working for the fewer.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: