Greenspan Warns Against Stagflation, Calls For More Aid To Homeowners

AP:

Alan Greenspan, former chairman of the Federal Reserve, suggested Sunday that a tax break or other government financial help for homeowners facing the mortgage crunch would be the best political fix for the economy.

He cautioned against meddling with home prices or interest rates to address the housing problem.

Greenspan did not specifically call for a tax cut. Instead, he called for the government to apply money to the severe housing market slump. Such a cash infusion would typically come through a tax break or a new government spending program.

Read the whole story: AP

Comments

[mamacat]

Here's a suggestion, although it'll be too late to help people already hurt in the sub-prime mess: go back and look at the record of President Doofus, for the last 7 years, and undo every last thing he has done. That should go a long, long way toward solving everything that the federal government has done wrong since Clinton left office.

[Rog49Thomas]

Problem here is the size of the problem.

When you see central banks around the world co-ordinating policy and "carpet bombing" the markets with liquidity ....

When you see a central bank suddenly dramatically reverse course within a matter of days (Mervyn King at the Bank of England) ....

When you see commercial banks agreeing to freeze rate increases on loans ...

When you see commercial banks creating a superfund to buy toxic waste assets ...

You can bet we are peering into the abyss of a financial meltdown of global proportions.

Pray that they don't screw this up 'cause you will get to live the pain.

(But no need to worry about those higher up on the food chain. While they might "feel" you pain, their own discomfort won't require more than a few tylenol).

[mmckinl]

Can't we ever get rid of these failures .... They keep reemerging like bloated corpses spuing vile odor and disease into the air.

Greenspan will go down as one of the worst , if not the worst Central Banker we have ever had and the reason is simple : His implicit and explicit proponence of deregulation.

By order, by Congressional testimony , by fiat Grreenspan has helped break the back of New Deal and subsequent Regulation that would have prevented or miniimized every one of the 6 major financial crises this country has faced over his tenure.

The currrent mortgage crisis would , indeed could never have been as bad had Greenspan implemented tighter loan underwriting standards that Congress had asked him to do in 1994. Ed Gramlich warned of this pending crisis early and Greenspan took no heed, defering to his banking cartel.

The heigth of cronyism and contempt for the public was his testimony in hearings about the 2005 Bankruptcy Bill where he accused people en masse of using bankruptcy as a dodge to financial responsibilty knowing full well that 90% off bankruptcies were due to job loss, divorce or health costs. He used the Bankruptcy Bill to backstop his reckless deregulated financial sop to his banking friends on the backs of the truly most disadvantaged class of debtor.

And now we have Greenspans' legacy , years of frustration, pain and loss in the housing sector and beyond.

There is no fix , but there is justice. People should be allowed to have their mortgages adjusted in bankruptcy court. Barney Frank has a bill for that but the banks want to bleed consumers for every last drop. And it is indeed time for a little justice .

[kells1001]

Lets face it no one had a problem when the government came in and bailed out the savings and loans. No one had a problem when we changed bankruptcy laws to assure people couldn't get away with the family farm(really to make sure banks didn't get hit with losses) in tact. Although people really have a problem with an individual homeowner receiving a break. Sorry none of it will work. Incomes and job security simply aren't keeping up with spending habits. So get ready for more rate cuts, more credit card debt and a doomsday scenario that is only getting worse as the hole just keeps getting deeper and deeper.

Unless Allen Greenspan has ideas on how to create higher incomes for homeowners in need his suggestions will mean little more than a hill of beans.

[tiggersthotfulspot]

Greenspan is an evil old bat. The lesson of the last 20 years is that the working class in the USA can be trampled on and not so much as wimper in protest. All that "growth" was just the result of becoming the world's bigger borrowers... when someone finally realizes how naked the emperor is, it's way too late.

[DallasNE]

Isn't stagflation already here? In order to keep the Gross Domestic Product number positive the government includes export sales and a building inventory. Inflation during the last 12 months is over 4% and my 3% wage increase is supposed to keep up?

Most of what is happening in the economy today is a direct result of the lingering effects of Fed policy during Greenspan's tenure and that will be the case for another 3-4 months when the impact of Bernanke's policies will take root.

[jerrypenguin]

"...government financial help for homeowners facing the mortgage crunch would be the best political fix for the economy..." - Greenspan

He's right. Homeowners are little capitalists. They have the same rights and privileges as the big Wall Street capitalists. The little capitalists homeowners don't "own" a home. They have an "investment." As with the big Wall Street capitalists the immutable laws of economics state an investment (no matter how stupid) must appreciate.

[curiousasheck]

Snip. . . The current "distress" is the inability of the markets to function -- no matter what the Dow Jones Industrial Average appears to say at any given moment.

[Wiredwilly]

In other words Greenspan said,
" Steal more from the people, give it to the Banks,
and let the Fed continue to rob everyone blind."

[Donk]

I don't remember Paul Volcker pontificating about the state of the economy or offering suggestions to his successor at the Fed. Class acts are few and far between these days...

[Kendo Nagasaki]

Or turn on TV and find the program which tells you how to make a fortune on foreclosures, heh heh.

[Kendo Nagasaki]

How about a moratorium on foreclosures for five years and a cap on the mortgage interest rate of 5%.

Too simple ?

[jimmyaj]

"...Cash is available and we should use that in larger amounts, as is necessary...", sez Alan "Print-Me-­A-Few-More­" Green$pan. Gee Al, does that mean money grows on trees, too?

[Erdgeist]

No real economist believes in the general equilibrium theory (laissez-faire capitalism). The slightest thing can upset the tenuous equilibrium such as the high cost of gasoline, handing out non-collateralized loans, and flooding the economy with cheap labor from abuses in immigration laws and mistakes in NAFTA. It is made far worse when the Bush Administration destroys the safety nets of 'feasible socialism' in an effort to create disaster capitalism, handing even more of the nation's commons to the corporations. Welcome to penury.

[jasjohn128]

Homeowners will get no relief. Any fixes, or bailouts, or "adjustments", or whatever you want to call them, will be made in favor of the crooks who hustled those phony loans in the first place.

Did anybody here read Ben Stein's article in last week's Sunday NYT? Carefully, ever so carefully, Ben got his point across, and he used biz practices at Goldman Sachs as his exemplar, to make his point.

The hustlers who originated the loans took their profit up front, then they bundled the phony goods and sold them to other hustlers, and then sold them short once they had their money in pocket.

No carny ever skinned his mark so well. Loan originators, "quality" brokerage houses and banks knew it was all a scam, right from jump street, and best of all they knew for sure (with Bush in office) that they'd get well once it all turned to shit and they'd have to admit they'd been selling and holding worthless paper. Hence, these "bailouts" and fixes and tedious speeches from Ayn Rand'ian idiots like Alan Greenspan.

The Bush administration is winding down and the players know they'd better cash out and take their winnings right quick - because in January, 2009, this country is gonna be dead broke and fucked beyond repair. It almost doesn't matter who's gonna be President next, know what I mean?

Unless the pussy-whipped Democrat leadership gets off the campaign trail, grows a pair of balls, and slams this rotten George W. Bush motherfucker and his scumball friends right into the ground and into prison, right fucking now.

George W. Bush, an incompetent, drug-addicted, wet-brained drone, was hired merely to talk shit to America while his bosses stole every penny they could get their hands on. That's been the story of his life so far ('cause he's truly his daddy's son) and that's why he was made President: to stand by and watch while America is busted up, its people impoverished, and its treasure passed out to the highest bidders.