Greenspan: Worst financial crisis in a century

Posted: September 16th, 2008 | By Ray Hartley | Posted in General
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THE collapse of Lehman Brothers, the sale of Merrill Lynch, the demise of Bear Stearns, the bail-out of Freddie Mac and Fanny Mae suggest that the US is entering a major test to its financial institutions.
Now Alan Greenspan, the widely respected former Federal Reserve chairman has put it starkly, telling ABC news that the crisis “is in the process of outstripping anything I’ve seen, and it still is not resolved and it still has a way to go.”
And there is no end in sight: “Indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes.” That would only happen next year.
The US crisis would affect the world. Said Greenspan: “I can’t believe we could have a once-in-a-century type of financial crisis without a significant impact on the real economy globally, and I think that indeed is what is in the process of occurring.”
From the ABC report:

Greenspan, who left office in 2006, said he expected more failures before the crisis eases. While regulators “shouldn’t try to protect every single institution,” he said, companies should be kept from failing “in a sharply disruptive manner” to prevent further shocks.
Greenspan’s critics say he helped inflate the housing bubble by keeping target short-term rates too low for too long, leading to reckless lending and borrowing in the housing market. But Greenspan has said the problem lay not in the loans themselves, but in their repackaging as securities and sale to investors.

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Comments

 

Wang Jing

September 16, 2008 at 9:56 am

This pheonomenon is indeed created by Alan himself

 

Cliff Fraser

September 17, 2008 at 6:32 am

Hey – Let’s get back to basics, take off the blinkers and look around a bit. Just how much real wealth have all these financial companies (banks, financial advisors, insurance companies etc) ever created? Quick answer – absolutely none. Everything, and I mean everything in this world that we judge our wealth by is made by the Producers. Yes, the guys who build the cars, the buildings, every electronic gadget on the planet, planes, clothes, grow and process food etc, etc. So ask yourself this; why is it that all the people who actually produce all the real wealth have to borrow from the banks in order to buy back the very things they produced in the first place.

The banks don’t produce any real wealth, none, so where did they get all their money from that allows them to lend so much back to the very gullible public? Google ‘Fractional Reserve Banking’, the key to the world’s financial woes are clear for anyone to research.

The little investor? well he just represents around 25% of all investment, the rest is owned by the financial institutions of the world who spend their days playing around with the wealth originally created by the Producers. And since all the other financial institutions in the world have never created any real wealth, where did they get their money from? The financial markets around the world have gotten just a bit too big and the Producers of the real wealth just can’t satisfy their greed – result, the so called Credit Crunch (and every other financial crisis there has ever been for that matter).

In reality the Producers should not need to borrow money to buy things, the credit society has been created by the banks, for the banks. It’s time to reorganize the whole corrupt scene. The chances of it happening any time soon – Zero. The bankers have too strong a hold now, they control all the major Governments in the world and the others will follow soon. Beware of the bankers; remember you read it here. Just one other thing, you can’t deny that it makes for really great television, the continuous stream of red teletype along the bottom of the Bloomberg Television screen and scenes of Lehman employees exiting their ex-workplaces with their cardboard boxes is way better than anything Comedymax is screening right now.

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    I am Ray Hartley, the editor of The Times, South Africa, a daily newspaper which was launched in June 2007 under the Sunday Times umbrella. I'm also the editor of Times LIVE.

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