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What caused the recession?


Sort of a cash for clunkers program. $180,000 speaking fee?
The Fed doesn't have enough power to straighten out the US economy. They need the power to raise and lower taxes. (i.e. everything that congress has the power to do, but won't.)
-- Ron
Reply to
Ron Peterson

Before reading the article I was going to rejoin to the above, "Especially now that interest rates have been set so low there is no room for further changes to help improve the current situation." IOW, the Fed blew their wad. Then I thought I better and read the article Skip cited so as to see if anything intelligent was in it. Leaping out at me is the line: "Greenspan, in his final four years as Fed chairman, kept rates too low and regulation too light, goes the argument."
Yet while Greenspan was the Fed Chair, only a few expressed some concern about these practices. ISTM no one really sounded the alarms. I think almost everyone bought in. Hence to suggest that Greenspan or Bernanke should have gone against the tide does not seem entirely fair. They would have to be seen as god-like and similarly obeyed as though they were gods, all-knowing, etc. (Granted I was known to refer to Greenspan as "President Greenspan" during his day. But it was mostly in jest. He does not have the powers of a real leader.) We do not have any real leaders today, though maybe this is because the followers are so uneducated and unreasoned. These followers are gaining traction, too. To me it adds up to a lot of frustration and some catastrophe for several more years, until people have experienced the worst of not working together such that, for example, even those on the far Right see the intelligence of say universal health care and a single payer system.
Greenspan "plays tennis" among other things today. Would that he gave a little thought, before and after tennis, to the many people out of work and what he could do to help them. Owning that he could have done more to prevent this, even with the large tide against him, would be a start.
Reply to
Elle

He was wrong and will never admit fully.
However I respect his opinions and read his columns for insights.
Reply to
rick++

sure it does. Greenspan was wrong, along with a lot of other people. But not all. I was among those who kept their powder dry during this period.
Is the Fed supposed to act based upon opinion polls? Or are they supposed to be the experts and do the right thing, lest the country tank?
Reply to
Wallace

The flaw in that argument is that the stability of the WHOLE world-wide financial system is based on trust. I trust you to follow our contract. I trust the insurance company will pay off in case of an accident. I trust that this piece of paper will pay for my lunch. If the opinion polls show a lack of trust, then everybody is out of a job and we regress to barter or caveman tactics. The Fed has to base at least some of it's actions on opinion polls.
Chip
Reply to
Chip

This is true. You're right.
I guess I wish we just had people strong enough in government to do the right thing and ignore Congress (beholden so often to other than the best interests) and the masses.
Reply to
Elle

on 2/9/10 1:30 PM Elle said the following:
Strong people in government? Can't happen. Government is made up of elites from colleges that have never held a real job.
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Reply to
Yadda

Define "real" job. I suppose that scientist, engineer, physician, lawyer, accountant, pharmacist, teacher, dentist, archaeologist, financial adviser (to keep it on-topic), quarterback are not "real" jobs? Politicians don't require a degree and we have many in AZ and DC that clearly show that lack of education every day.
Chip
Reply to
Chip

I have always found it a curiosity of human nature that, when something goes wrong, we seek to blame a single entity. I guess it's not too difficult to understand. In blaming a single entity, we avoid placing accepting any personal responsibility.
Personally, I believe that pretty much everyone had a hand in the recession. Greenspan (i.e. the Fed) made mistakes. The government made mistakes. The financial institutions made mistakes. The people made mistakes. Heck, I bought my first house in 2005 - fuel for the fire.
It's time we stop playing the blame game and realize that nearly everyone is to blame. Clearly there's value in analyzing what went wrong and how to avoid it in the future. But we are wasting so much time and energy trying firmly place the blame on one entity. It's downright embarrassing.
--Bill
Reply to
Bill Woessner

Define "real job". Define "in government". Does in government mean any government employee (federal, state and local), just appointees, just elected officials or what?
--
 .Bill.
Reply to
Bill

Just having a friendly exchange here. I think it is important to discuss the main players in this mess and try to learn from it. If we do, then for one, when we all vote, we will be more informed and so more likely to put in people thoughtful about history. E.g. what happens when interest rates are lowered and one sees signs of a bubble, and so on. Maybe it is cliché to look for a single entity. But it is also becoming cliché, and I think not very instructive, to say it was everyone's fault.
Reply to
Elle

"Real jobs" are mostly financial in nature, ones where you have a lot of other people's money to throw around and use to take big risks and hope to increase the reputation of your company and your own salary and bonuses even when the risky ventures don't turn out very well.
Reply to
Don

Think about that the next time you take a flight somewhere, drive over a bridge, get sick, get sued, play a laser powered DVD. Mostly financial-ha!
Wait a minute, you're joshing right?
Chip 1
Reply to
Chip

Indeed. It is possible to trace almost all factors that caused this mess to their origin and once that's done, we'll learn from them. Otherwise, there's no learning from such colossal mistakes.
Reply to
Augustine

You have a point. I guess I was wrong about "real jobs" being in the financial sector. As you say, they are probably elsewhere. Come to think of it, our economy might be better off if all those gurus in the banking business had held down real jobs before they got into banking.
Reply to
Don

ROFLMAO!
But you only got it partially right, and may have confused the notions of "real job" and "real pay." (I'm joking back with you.) The two are apparently sets of mutually exclusive statistics. (Setting up one's own company is not technically a "job" as the individual is not actually "employed" by anyone who gives him orders, and the real money is not technically "pay." One must be careful to make accurate clinical distinctions when studying the biology of any species)
The real "job" the bankers pulled off was convincing Congress that they were members of the same data set (i.e. "real jobs"), thereby seducing with the mere scent and sniff of real pay, the rescindment of the separation between real banking and de-facto hedge fund, thus accomplishing the task of The Getaway.
But to get to the topic ... one PhD economist testifying before Congress (about the Federal debt level) finally, I say: finally, someone prominent, said, "LTCM" in the same sentence describing the activities of banks that led to this recent worldwide blow up. Long Term Capital Management was the hedge fund that ran into the Black Swan in the middle of an otherwise rosy statistical fiction of real pay. One could say LTCM was a once in a century event with much more veracity than one could refer to this financial crisis as such. LTCM blew up in 1998, you see ....
My forecast is that the phrase "individual responsibility" will be the key words of this present century.
Reply to
dapperdobbs

[There you go again, dapperdobbs, raising the intellect of this room along with the awareness of the power language may have. Mortals need not bother to try to imitate this kind of writing.] snip for brevity
The Getaway presumably referring to the repeal of Glass-Steagal in 1999?
The first time I read the above, I did not get it. Now I realize you may be talking about the longer term. We are not talking "individual responsibility" yet, but I agree we are on the way. To me this will paralleling to some extent the change in culture during and after the Great Depression. Or maybe during and after any bubble, "individual responsibility" rises for at least some factions.
Elle (email negligent while on parent duty and recreational leave to maintain cheerful(!) attitude)
Reply to
Elle

Elle,
Very astute and a really good feel for the aftermath of the Great Depression. What makes a country great is its citizenry. The feel I get today is that we all know what happened (even without details), and we've sucked it up to carry on. I get this from many 'ordinary people' I've talked to over months.
I think the facts are that each individual is responsible for his actions and whatever condition he or she may be in. Bill Woessner made a really very fine observation about human nature in this thread, one I've read two or three times carefully.
ISTM that pressure is being put on Congress, on various issues, to correct the excesses that the priviledged classes have again committed - those actions which make the wide population single them out as irresponsible. Just my personal opinion, Reagan was an honest man with a good head, political skill, and a freedom to speak freely. He reached into many people's hearts with common sense and staright talk. Today, maybe the majority are realizing in their own deliberations, that he was spot-on right about a great many things. JFK is famous for a similar statement he made, 'Think not what your country can do for you; think what you can do for your country."
When the majority begin thinking like great men, we're all in good company.
Reply to
dapperdobbs

Another important thing to bear in mind is that people who control government, whatever their previous employment may have been, are elected in the first place and kept in government by all those ordinary people who have "real jobs," at least by the ones who have enough time to get away from those "real jobs" and get to the polls.
Reply to
Don

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