Alan Greenspan: Economy Worst Since 1930s, Tarp Insufficient, Supports Bank Nationalization

Former U.S. Federal Reserve Chairman Alan Greenspan said on Tuesday that the global recession will "surely be the longest and deepest" since the 1930s, adding that the Obama administration's Troubled Asset Relief Program will be insufficient to plug the yawning financial gap.

"Since the collapse of Lehman Brothers in September, we have been exposed to the most rapid and unremitting set of gloomy statistics that I have ever seen," the former Fed chairman said a meeting of the Economic Club of New York, according to Politico.

Greenspan later tagged the current crisis a "once-in-a-century type event."

The move was an about-face for the free-market economist.

While Greenspan steered clear of his role in the market collapse, "he did take a new swipe at the market's self-correcting tendencies and bowed his head to a new period of increased regulation," the Wall Street Journal reported.

"All of the sophisticated mathematics and computer wizardry essentially rested on one central premise: that enlightened self interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively monitoring and managing their firms' capital and risk positions," the Fed chairman said. The premise failed in the summer of 2007, he said, leaving him "deeply dismayed."

In other, un-Greenspan-like news, he told the Financial Times that he supported the nationalization of banks.

"It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring," he said. "I understand that once in a hundred years this is what you do."

Nationalisations would "allow the government to transfer toxic assets to a bad bank without the problem of how to price them."

For the text of his speech read here:

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Comments

[PhilipTaylor]

Is this the REVISIONIST TOUR?

I have spent his entire professional life building practical models that were used in government and business to reduce costs, improve service, and maximize profits. However, I also know that if misused models (like statistics) can be used to distort views and justify wrong actions.

Greenscam using models to provide justification for his own narrow and perhaps corrupt philosophy is like Bsh/Chy using the CIA to falsely justify the IR inv_as_ion.

Recall that Greenscam raised FED interest rates to 6.5% during Gore's run for president to tank the economy and increase Bsh's chance of winning. Then after the election, having created the recession in 2000, he lowered rates to record lows and flooded the market to enable this Crisis, while not writing mortgage regulations.

So it is not simply anger, but it is FACTS of his corruption that must be addressed! That is why anything he says must be taken as a “grain of salt.”

[royevatom]

Alan Greenspan has been useless in the past as he knew and said he knew that our economy was growing to fast and that there was to much free for all lending and credit going on. He did nothing about it. The Federal government knew about it and did nothing to curtail the absolutely irresponsible spending that was borrowed money. This guy is about 30 years behind the times. He now admits that Greed sank the ship but it was his job to monitor the effects of a free market on the economy of this nation. What a loser. His is probably the worst legacy other than that of Bush.

[inorbit]

It's what I suspected all along -

Alan Greenspan is a socialist!!!

[rkimball]

asking alan greenspan for economic advice equates to asking barney franks for advice on buying or selling a home.

[Carolab]

In the fall of 2001 I attended a private investment conference in London to give a paper, The Myth of the Rule of Law or How the Money Works: The Destruction of Hamilton Securities Group.

The presentation documented my experience with a Washington-Wall Street partnership that had:

* Engineered a fraudulent housing and debt bubble;
* Illegally shifted vast amounts of capital out of the U.S.;
* Used “privitization” as a form of piracy - a pretext to move government assets to private investors at below-market prices and then shift private liabilities back to government at no cost to the private liability holder.

Other presenters at the conference included distinguished reporters covering privatization in Eastern Europe and Russia. As the portraits of British ancestors stared down upon us, we listened to story after story of global privatization throughout the 1990s in the Americas, Europe, and Asia.

Slowly, as the pieces fit together, we shared a horrifying epiphany: the banks, corporations and investors acting in each global region were the exact same players. They were a relatively small group that reappeared again and again in Russia, Eastern Europe, and Asia accompanied by the same well-known accounting firms and law firms.

Clearly, there was a global financial coup d’etat underway.

The magnitude of what was happening was overwhelming.

http://solari.com/blog/?p=2058

[JohnSawyer]

You, or someone else at the conference, should have shared the information with the public in a way it could understand, and not let up until the public got riled enough to do something about it.

[JohnSawyer]

Are you saying there were no Americans, British, etc. involved in this planning, beyond accounting firms and law firms? I find that hard to believe.

[sbrannon]

So, am I understanding correctly? This coup d'etat, has been underway for quite some time...and the Press, mainstream media did not publish these facts? And what about those, who know about this....what did they do to tell the "world" about this shift?

It seems that the process is on a roll, and those with the bucks are in control, and people like me (a freelance, photojourn­alist/writ­er, on humanrights issues, who is always broke, has no power what so ever, to control these issues that ruin peoples lives.

What can be done about this? Do we just sit and watch it roll?
aughh. frustrated.

[royevatom]

The issue should be addressed by all concerned for the good of all peoples of all nations.

[JohnSawyer]

Carolab:

Thanks for the link to the article, but unless you're its author (Catherine Austin Fitts), you should have indicated at the top of your comment who actually wrote the aricle, or else you'll trigger comments directed towards you from people (like me) who initially thought you were posting a personal comment.

[Carolab]

I try to do that but I run out of room sometimes to post the author's name.

[Phalanxman]

When did it become President Obama's (wow, that feels good to write!) TARP Program? Wasn't that passed while the Bush was still in office? Didn't John McCain suspend his campaign to rush back to Washington (stopping along the way to chat with Katie Couric and snubbing David Letterman) to get that passed? But then helped block it? Then voted "no" when it did pass? When did this plan become Obama's? Somebody help me out here. I am incorrect? Am I missing something?

[rebelzz]

We must remember Greenspan's only human, and he makes mistakes...

He's now guessing, like the rest of us. So we gotta take what he says with a pinch of salt.

[JohnSawyer]

It hasn't been determined yet whether Greenspan was merely "making mistakes". Anybody who couldn't believe greed would get as bad as it did, doesn't deserve to be in a position to handle anybody else's money. Until we know better, he may be expressing false surprise ("I'm shocked--shocked to find that gambling is going on in here!"). And for him to redefine the collapse as being caused by the financial institutions not keeping enough real money on hand to cover their debts, when the real problem was that their level of greed was such that this was impossible, is not something a supposedly educated, experienced man would normally say if they were being honest.

"All of the sophisticated mathematics and computer wizardry essentially rested on one central premise: that enlightened self interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively monitoring and managing their firms' capital and risk positions..."

Hah! Right.

[Carolab]

Read Ravi Batra's book, "Greenspan's Fraud".

[PhilipTaylor]

Is this the REVISIONIST TOUR?

I have spent my entire professional life building practical models that were used in government and business to reduce costs, improve service, and maximize profits. However, I also know that if misused models (like statistics) can be used to distort views and justify wrong actions.

Greenscam using models to provide justification for his own narrow and perhaps corrupt philosophy is like Bsh/Chy using the CIA to falsely justify the IR inv_as_ion.

Recall that Greenscam raised FED interest rates to 6.5% during Gore's run for president to tank the economy and increase Bsh's chance of winning. Then after the election, having created the recession in 2000, he lowered rates to record lows and flooded the market to enable this Crisis, while not writing mortgage regulations.

So it is not simply anger, but it is FACTS of his corruption that must be addressed! That is why anything he says must be taken as a “grain of salt.”

[larry278]

Very well, people still listen to Greenspan. Exactly who listens to him; where do these listeners live; how much power do these listeners have; again, how many people still listen to Alan Greenspan?

[ztck5356]

Have you noticed every time the stock market shows a + instead of a - the Feds come out the same day with a gloom and doom statement and the next day the market tanks? I wish the Feds, like Alan Greenspan and Bernake would keep their mouths shut! Like the America people don't hear enough bad news all day! They have nothing to contribute, so just shut up!

[magibrotherhood]

they work for International bankers----they could give a rats behind what happens to the U.S.

[sbrannon]

Maybe it is all a scare tatic, so we panic and welcome the internationalizing banking system, and chips in our arms.

[themodernleader]

Former Chairman Greenspan's client bankers pay him well to pontificate on the wonders that will result from Uncle Sweetness exproppriating bankrupted institutions and being held responsible for their toxic garbage paper. The rational solution is to either do nothing and let the devil take the hindmost or do nothing and then create the American National Bank that would gradually license sound banking institutions around the country. Let the present t monopolies stew in their own toxic juices. No more bail outs. No more rewards for harmful management.
Instead, our Nation shall create a new decentralized, accountable, regulated (in fact) financial institution that uses money as the oil that makes the transfer of assets and services possible and practicable. The new bank will reward those prudenly managed banks that are still standing in this deepening depression. Money willl no longer be a tool of speculators and leverage for the enrichment of the few and the sacrifice for the many. The use of money will no longer be allowed to be used as an end in itself.

[katok]

Correction, now we are pleading with them to take over the banks....or is that what they wanted all along? Remember, they predicted we would walk right into the KBR detention centers for food... this is beautiful...is Lex Luther their criminal mastermind

[Carolab]

ENGINEERED.

[Carolab]

Bailout, Rescue Plan, Stimulus Package, Toxic Assets, Subprime Mortgage Crisis are just a few of the buzz words the financial media has filtered to the American public over the last year. On a daily basis media outlets continue to tell us about the “unprecedented” financial times in which we are living and what may have caused this disaster. There is something that they left out that may very well be a huge part of the entire financial disaster: the PORTAL Alliance.

The PORTAL Alliance is “an open, industry-wide platform for the offering, trading and centralization of information in privately placed 144A Securities.”

* Bank of America - BAC - down 86.65%
* Barclays Capital - BCS - down 84.31%
* Citi - C - down 89.89%
* Credit Suisse - CS - down 53.42%
* Deutsche Bank - DB - down 75.87%
* Goldman Sachs - GS - down 54.77%
* JP Morgan - JPM - down 38.1% * Merril Lynch - bought out by BAC
* Morgan Stanley - MS - down 57.57%
* UBS - UBS - down 73.03%
* Wachovia Securities - WB - down 86.37%

Does anyone else find this list to be the who’s who of financial fall outs on Wall Street? What makes this even more interesting is the fact that this “open platform of trading” was created in November of 2007. To help illustrate how poorly this group of institutions has performed, the stock performance of each security is listed.

http://www.subprimeblogger.com/the-portal-alliance-could-be-the-destruction-of-our-economy-and-we-dont-even-know-what-it-is/

[sbrannon]

Okay, I am a ditz here. I don't understand the function and effects of the Portal Alliance?
Can someone be a bit more clear...to the non financial folks?

[rbchilds]

Hey we now have Geithner at the controls, wasn't he the head of the NY Fed during all this chaos?

[magibrotherhood]

yes. He might have been involved in the derivatives mess as well---or at least he must have been aware for Quite a while that they were toxic.

[JohnSawyer]

He's now started a public PR campaign to portray himself as an average guy who "don't like them guys on that fancy Wall Street".

[rbchilds]

Its amazing how he is perceived as a demigod under the Clinton administration but a devil under the Bush administration.

[katok]

First they took over the phonelines, then they took congress, then the auto unions, now they want whatever is left of our money. Monsanto controls the food. Check and Mate

[Skeetshooter]

P.S. I think he's right about this one, but he's only agreeing with Paul Krugman, whose credibility is still intact.