Wednesday, April 07, 2010

If you ever thought the FED was pulling the levers to crash the US economy

Think no more. You'd be on par with Alan Greenspan's state of mental waste.

Here is your indirectly attributed proof via a hedge fund manager who did not need a bailout but "got lucky" according to the FED puppet "Maestro" of disaster Alan Greenspan:

"I Saw the Crisis Coming. Why Didn’t the Fed?
Published: April 3, 2010"

"ALAN GREENSPAN, the former chairman of the Federal Reserve, proclaimed last month that no one could have predicted the housing bubble. “Everybody missed it,” he said, “academia, the Federal Reserve, all regulators.”

"Mr. Greenspan said that he sat through innumerable meetings at the Fed with crack economists, and not one of them warned of the problems that were to come. By Mr. Greenspan’s logic, anyone who might have foreseen the housing bubble would have been invited into the ivory tower, so if all those who were there did not hear it, then no one could have said it.

As a nation, we cannot afford to live with Mr. Greenspan’s way of thinking. The truth is, he should have seen what was coming and offered a sober, apolitical warning. Everyone would have listened; when he talked about the economy, the world hung on every single word.

Unfortunately, he did not give good advice. In February 2004, a few months before the Fed formally ended a remarkable streak of interest-rate cuts, Mr. Greenspan told Americans that they would be missing out if they failed to take advantage of cost-saving adjustable-rate mortgages. And he suggested to the banks that “American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.”

Within a year lenders made interest-only adjustable-rate mortgages readily available to subprime borrowers. And within 18 months lenders offered subprime borrowers so-called pay-option adjustable-rate mortgages, which allowed borrowers to make partial monthly payments and have the remainder added to the loan balance (much like payments on a credit card).

Observing these trends in April 2005, Mr. Greenspan trumpeted the expansion of the subprime mortgage market. “Where once more-marginal applicants would simply have been denied credit,” he said, “lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately.”

Yet the tide was about to turn. By December 2005, subprime mortgages that had been issued just six months earlier were already showing atypically high delinquency rates. (It’s worth noting that even though most of these mortgages had a low two-year teaser rate, the borrowers still had early difficulty making payments.)

The market for subprime mortgages and the derivatives thereof would not begin its spectacular collapse until roughly two years after Mr. Greenspan’s speech. But the signs were all there in 2005, when a bursting of the bubble would have had far less dire consequences, and when the government could have acted to minimize the fallout."

Many people saw the abnormality in the price dislocation of housing vs income and correctly foretold it would destroy the US economy as we knew it but few of us where lucky enough to be managing hedge funds to take advantage of the absurdity of the housing bubble that is now being reflated into a purely synthetic non derivative based stock/bond pumping bubble that will have many parasitic bankers and their bureaucratic minions getting ready for their perp walks.

Here is a nice quotation slide show of the FED puppet "soon to be sans clothing" emperor's mental strip tease into revealing his bonfire of the vanity's ability to lie pretty well in doing the bidding of his handlers who must be delighted that they are free from being incarcerated for wrecking the US economy and bringing about the start of the Greatest Depression:

In exchange for increasing the value of his CDS(Comeuppance Due Satan) via inflating his soul's CDO's(Conspiratorial Demonic Obligations), Greenspan awaits the Universal Soul Recycling Gallows by keeping his mindlessness on his blockbuster Harry Potter like Sorcerer's economic memoir book.

His rivetingly boring retelling of FED Financial Wizardry was evidently worth an upfront 8 million thin air FED unit fee/bribe after walking away from the FED with an added 180k per speaking engagement bribery retainer annuity bonus to continue to keep his mouth shut about what really goes on at the FED( The outlandish speaking engagement fees are otherwise known as backdated bribery options exorcises)

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