Thursday, February 12, 2009


Is this for real? Check out CNBC tonight. David Faber hosts a two hour piece tonight airing at 8pm and 12am EST called 'House of Cards'. Apparently Greenspan admits that he didn't have a full understanding of the subprime mortgage market or of its derivatives.

In response to his critics, according to the DealBook blog, Greenspan said, "We could have basically clamped down on the American economy and generated a 10% unemployment rate. And I guarantee we would not have had a housing boom, a stock boom or indeed a particularly good economy either."

I have to watch this to see if this was out of context somehow. If not, Alan, we are well on the way to 10% unemployment and we will be lucky if it stops there. Also, no housing boom would mean not as big a problem now, right? No stock boom? Oh darn. And finally, indeed we don't have a particularly good economy now!

Perhaps if rates weren't artificially low from 2002-2007 we wouldn't be in the trouble we are now. Maybe institutions like Bear Stearns and Lehman Brothers which made it through the Depression would still be around today. Maybe the global economy wouldn't have fallen off the tracks. Maybe.......

I once sat next to Greenspan at a baseball game in the owner's box in Baltimore. He said he had been a baseball fan when he was younger, but didn't follow it much now. I figured, 'oh well, at least he is an expert on the economy'.

Cheers, Mike

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