Greenspan: Once in a century financial crisis

[White Doors]

I do want to see Canada improved, I really do. I think though, that in all of our complaining, we often forget to celebrate whats really so good about this place. What we have to ask ourselves is why our productivity is so low. I'm not sure if we really know that.

I think when it comes to healthcare, one of the big problems is the same one that is currently affecting very other industry and that's a shortage of labour. I'm not sure how we can best address that problem. Streamlining of the immigration system as well as a reform of the welfare system may help, but I really don't know the best way to get more people into the workforce.

The biggest problem with out healthcare system is that there is no competition in it.

It is an inefficient, cold beaurocratic inefficient nightmare.

Just visiting a hospital takes you back to what you can imagine Eastern Europe was like in the 1960's.

It is a fossilized ideaological dinosaur and throwing more money at it will not only not make things better, it will make it worse.

Edited September 17, 2008 by White Doors

[Smallc]

The biggest problem with out healthcare system is that there is no competition in it.

It is an inefficient, cold beaurocratic inefficient nightmare.

Just visiting a hospital takes you back to what you can imagine Eastern Europe was like in the 1960's.

It is a fossilized ideaological dinosaur and throwing more money at it will not only not make things better, it will make it worse.

See, I don't see it like that when I go to a hospital here. As I said, maybe its different in other provinces, but I haven't seen anything all that bad through my experiences or from what I've heard from others. Its not perfect of course but I have been satisfied. I have no problem with private delivery whatsoever. It happens in many other countries. Public funding with private delivery seems to be a good idea provided it will give better value for money.

Edited September 17, 2008 by Smallc

[White Doors]

See, I don't see it like that when I go to a hospital here. As I said, maybe its different in other provinces, but I haven't seen anything all that bad through my experiences or from what I've heard from others. Its not perfect of course but I have been satisfied. I have no problem with private delivery whatsoever. It happens in many other countries. Public funding with private delivery seems to be a good idea provided it will give better value for money.

Not only that, we should also have private pay services too.

The Quebec Supreme court says so.

I lived in Alberta for 12 years, no family Doctor.

I have been here for almost a year and have been on a waiting list for a family Dr all this time.

My wife and I have been trying to bring a baby to term and we went to a private, pay clinic (cash since I have no supplemental insurance) and I was alot happier with the service I received there than at the public system.

There is something wrong there.

Edited September 17, 2008 by White Doors

[White Doors]

Public funding with private delivery seems to be a good idea provided it will give better value for money.

If it didn't they would go out of business!

Simple!

[HisSelf]

The price of precious metals has plunged over the last few months.

So much for that.

Gold is up $85 today. What do you make of that? Maybe people are running from dollars? Wonder why? BNN interviewed the head of MacDougall, MacDougall & McTier today. They are celebrating 150 years of serving the Canadian investment community, if you can believe it. He was talking about how much the currency has become devalued by the bigging up of investment enterprises. Now we have companies that are moving billions of dollars a day. He seemed to feel that this was devaluing the currency.

Judging by what is happening with gold today, I'd say he might be right.

By the way. His advice for these troubled times? Don't panic!

[HisSelf]

It's questionable whether anyone on Wall Street or at the Federal Reserve can state with any degree of certainty how much risk there is to the markets

Funny how many Bloombreg, BNN, etc analsysts are now crawling out of the woodwork to tell us that: It's all Greenspan's fault (LOL), it's all the government's fault (LOL - how often have we heard them tell us that life would be so much better if the government would just get out of our hair?).

You're right. Nobody knows how much risk is now in the markets, and that is exactly the problem. If you cannot quantify risk, then how to you value the market?

Captialism. Ain't it grand? The mighty US of A has damned near destroyed the world. The Russian market has had to close two days in a row because there was no way to make the market.

The AIG collapse (bailout my a$$ - they have been given 24 months to liquidate themselves) shows you how bad the situation has become. 50% of their business was in Europe. Their insurance business was underwriting much of the financial community. For example, AIG had insured the rent of Lehman Brothers London HQ for 4 years in advance in the event that Lehman collapsed. A house of cards.

We'll be damned lucky if we get out of this without a worldwide financial collapse.

As one analyst put it on Bloomberg this morning: "Sooner or later, the Fed is going to run out of money". Indeed. Numbers are not looking very good at the moment. Apparently the market agrees with this guy. The US government is still triple A. How long can it last?

And the wind whispers.... Boooosh!

[HisSelf]

Things have improved in Canada smallc, but I think alot of people think that Canada could be alot better than it is. We should be THE wealthiest country in the world, bar none. But we are not.

Our productivity rate is declining relative to other Western countries and our health care system is terrible.

There was a report released yesterday ranking us last as compared to Western Europe.

There are some glaring anomolies that need to be corrected and then Canada can come closer to it's potential.

Edit to add:

Don't get down about the people complaining - at least they care.

Get down about the people who can't see past the end of their noses.

People criticizing the country does not mean that they love it any less than you do - necessarily.

This sort of thing gets said a lot. Look at our infrastructure costs. Look at the size of our shoreline. The number of kilometers of highway. The number of small cities who have to subsist on property taxes because of the bizarro tax regime forced on them by the Provincial and federal systems. Even mighty Toronto has to constantly beg for money.

How are you measuring productivity? How are you measuring our health care system? I'll take our health care system over that of the yanks any day. Many of them are wondering if they might not be better off with our system.

Michael Moore gets pilloried for his movie Sicko, but you know, there is this video clip of Richard Nixoin enthusing at how Kaiser Permante was going to put the emphasis on denial of care that just will not go away. That is not health care.

[Oleg Bach]

It was shameful when I watch Greenspan address congress a few years ago - all the former Christian white anglo leaders stood up as if GOD head entered the room - as if all their private wealth depended on super Jew (and I mean that in the spirit of love) WOULD maintain the status quo for eternity - and that he was the god Mammon incarnate to grant them another fifty years of plunderous lucre never ending. What a joke - even Greenspan knew that you can only fiat the world to death for so long and reality kicks in - Just like this retired RCMP officer said to me yesterday - "I just lost a bundle in the stock market - it was my retirement money" .

I replied "What did you expect...to get something for nothing - well you got what was right and true when you expect something for nothing you eventually end up with nothing" AND there is a lot more nothing coming for many - fiatism is collapsing and reality is here..when you make a deal with the devil - he always screws you - that's his purpose - and to think you trusted Greenspan...he did his best to serve and even he knew there was an end to pleasing his masters..looks good on the greed crowd - money is a belief system - a religion..and some religions fail - as mammonism does and did. Mammon is a false god. End of story.

[HisSelf]

I think most people are confused by it. From what I've been able to see the root cause was lousy management on the part of CEOs and high flying Wall Street elites who got huge bonuses when they bet on risky ventures and win - but arent punished when they lose. Banks made lousy loans to people who never should have gotten them, then sold the mortages and risk up higher to investment banks and brokers, who often sold them themselves. This means the guy who is making all these loans gets fat bonuses, the bank is happy and shows big paper profits, so the manager gets a fat bonus, and the risk - they assumed - was passed up the line to people who didn't properly examine what that risk was before assuming it. The big players at all levels made huge bonuses and never worried about the future as they built up their house of cards.

This was combined with no real regulatory oversight by the American banking authorities to ensure banks and investment houses didn't go crazy with risk and debt. And since the last American banking crisis which cost the taxpayers a fortune in bail-outs it seems to me the government should have been watching a hell of a lot more closely. Of course, just like last time, it will emerge that most of the Senators and Congressmen involved in commitees which supervised the financial industry took in big, fat bribes from financial industry lobbyists.

Nicely said. The problem is that Wall Street has been focussed on the next quarterly report and that the people who were supposed to be bird-dogging the long term (i.e. the regulators) let themselves be scared off by the constant belly-aching from the private sector whining about how the government should stay outta of their hair. This is what happens when you let private sector whining intimidate the regulatory process.

Hopefuly the lesson that wil be learned is a very old one. The investment community has long said that is a mistake to put all your eggs in one basket. And yet we have a case here where the world investment community has handed its eggs to AIG for safekeeping.

Maybe this will result in a truly global market at last. If any good comes of this at all.

[HisSelf]

It was shameful when I watch Greenspan address congress a few years ago - all the former Christian white anglo leaders stood up as if GOD head entered the room - as if all their private wealth depended on super Jew (and I mean that in the spirit of love) WOULD maintain the status quo for eternity - and that he was the god Mammon incarnate to grant them another fifty years of plunderous lucre never ending. What a joke - even Greenspan knew that you can only fiat the world to death for so long and reality kicks in - Just like this retired RCMP officer said to me yesterday - "I just lost a bundle in the stock market - it was my retirement money" .

I replied "What did you expect...to get something for nothing - well you got what was right and true when you expect something for nothing you eventually end up with nothing" AND there is a lot more nothing coming for many - fiatism is collapsing and reality is here..when you make a deal with the devil - he always screws you - that's his purpose - and to think you trusted Greenspan...he did his best to serve and even he knew there was an end to pleasing his masters..looks good on the greed crowd - money is a belief system - a religion..and some religions fail - as mammonism does and did. Mammon is a false god. End of story.

Greenspan is agnostic when it comes to money. You have supported some of my posts, but I think you need to get your vision corrected. He was a very good Fed chair for many years. My posts pointed out that SOME ANAYLYSTS WERE BLAMING GREENSPAN LOL. OK?

[Smallc]

Not only that, we should also have private pay services too.

The Quebec Supreme court says so.

I lived in Alberta for 12 years, no family Doctor.

I have been here for almost a year and have been on a waiting list for a family Dr all this time.

My wife and I have been trying to bring a baby to term and we went to a private, pay clinic (cash since I have no supplemental insurance) and I was alot happier with the service I received there than at the public system.

There is something wrong there.

I don't agree. We should be making things better within a publicly funded system. people shouldn't be different just because they have money. And just so you know, my family would be able to afford private care, but I don't support it unless it is funded under the public umbrella and I think that you would find a great many Canadians feel that way. I know there are private clinics now, but I really don't agree with it as it competes with and takes away from the publicly funded system.

[August1991]

August, you're late to the game to even be discussing risk.

I mentioned as far back as June of this year about Lehman Brothers going bankrupt in the recession thread under Canada/US relations.

Late to the game?

msj, before you joined this forum, I started a thread (in September 2006) entitled: "Impending Recession - How deep? How bad? When"

I'm not denying the gravity of the financial shenanigans south of the border. But it seems to me the key question is whether changing paper values have any major effect on people's efforts in the real world. As it is, the sun rose yesterday, the tides still rose and fell and the vast majority of Americans got up, went to work and produced something of value for the rest of humanity. They got on with life.

Unemployment remains low, inflation is low and inflationary expectations are low. Businesses are devising new projects and planning new investments. There are hybrid cars, new cell phones, the human genome has been uncovered. Life goes on.

In a sense, it is not surprising that the financial sector is undergoing major changes. Computers have radically changed their business in the past 25 years or so - from ATMs to online banking, from spreadsheets to email.

Clearly you do not have this ability so please stop trying to fool those who may not know any better.

Around the world, because of this financial crisis, people are now afraid to do otherwise good deals. So, as a start to overcome this fear, I'll offer you a deal msj. If you'll drop the personal innuendo, I promise not to insult you too. I think our deal will make the world a better place, or at elast this forum.

----

Now then, if you want my opinion of this latest AIG bail out, here's Ken Rogoff.

I also don't disagree with Alan Blinder's comments in this

. (Similar to what I have written above.)

Captialism. Ain't it grand? The mighty US of A has damned near destroyed the world. The Russian market has had to close two days in a row because there was no way to make the market.

...

The AIG collapse (bailout my a$$ - they have been given 24 months to liquidate themselves) shows you how bad the situation has become. 50% of their business was in Europe. Their insurance business was underwriting much of the financial community. For example, AIG had insured the rent of Lehman Brothers London HQ for 4 years in advance in the event that Lehman collapsed. A house of cards.

We'll be damned lucky if we get out of this without a worldwide financial collapse.

Financial collapse? That's the least of our worries. It's a recession in the "real economy" that informed people are worried about.

But HisSelf, since at least Karl Marx, various people have been predicting the collapse of capitalism and its inexorable demise. Marx lived and died, the Berlin Wall rose and fell, but the NYSE still exists.

Edited September 18, 2008 by August1991

[August1991]

People are losing real money. It is not some sort of game of poker. Saying the same old things as in prior crisis does not rank high up as sound advice.

As for oil prices going down - this is a symptom and not something that is good for the economy (other than it probably means that we are at the end of the beginning in this part of the "game").

Deflation and a ZIRP is what people should be worried about now (ZIRP - zero interest rate policy - like Japan had for over a decade in the 90's and 00's).

I'll take on those points in turn.

1. People losing "real" money? If there are 10 houses on a street and one person sells a house at $300,000 and then another sells at $350,000, what have the other 8 gained or lost?

2. Oil prices going down. If they go up, it's a symptom of imminent doom and now if they go down, it's a symptom of imminent doom. Huh? Oil at $90 per barrel is good for America, good for Europe, good for Japan and good for China. You seem to think that oil prices are down because we are headed for a recession. I disagree. Maybe I'm wrong.

3. ZIRP. (Never heard that one before.) Zero nominal interest rates (and zero/negative real interest rates) in the US are extremely unlikely. Negative real interest rates are possible through high, volatile inflation. IME, Japan is unlike any other country on earth.

----

I will agree with you on one point, msj. Real estate has been the death spiral of more than one entrepreneur. (Think Robert Campeau, or the Reichmanns.) Real estate, like tulip bulbs, is a seductive market. If the US financial markets were to succumb seriously, I wouldn't be surprised to learn that real estate did them in.

Curiously, no one in Quebec has yet (to my knowledge) clearly stated the exposure of the Caisse de dépôt in the real estate and mortgage markets. Henri-Paul Rousseau astutely left the ship before anyone else noticed the icebergs.

[bush_cheney2004]

Financial collapse? That's the least of our worries. It's a recession in the "real economy" that informed people are worried about.

Agreed...seeing financial dinosaurs go extinct because of things like derivatives and over leveraged mortgage securities do not worry me in the least. The only real concern is the resulting squeeze on capital / loans to prime the economy.

But HisSelf, since at least Karl Marx, various people have been predicting the collapse of capitalism and its inexorable demise. Marx lived and died, the Berlin Wall rose and fell, but the NYSE still exists.

...."rumours of my death have been greatly exaggerated" - Mark Twain

[msj]

I'll take on those points in turn.

1. People losing "real" money? If there are 10 houses on a street and one person sells a house at $300,000 and then another sells at $350,000, what have the other 8 gained or lost?

2. Oil prices going down. If they go up, it's a symptom of imminent doom and now if they go down, it's a symptom of imminent doom. Huh? Oil at $90 per barrel is good for America, good for Europe, good for Japan and good for China. You seem to think that oil prices are down because we are headed for a recession. I disagree. Maybe I'm wrong.

3. ZIRP. (Never heard that one before.) Zero nominal interest rates (and zero/negative real interest rates) in the US are extremely unlikely. Negative real interest rates are possible through high, volatile inflation. IME, Japan is unlike any other country on earth.

----

I will agree with you on one point, msj. Real estate has been the death spiral of more than one entrepreneur. (Think Robert Campeau, or the Reichmanns.) Real estate, like tulip bulbs, is a seductive market. If the US financial markets were to succumb seriously, I wouldn't be surprised to learn that real estate did them in.

Curiously, no one in Quebec has yet (to my knowledge) clearly stated the exposure of the Caisse de dépôt in the real estate and mortgage markets. Henri-Paul Rousseau astutely left the ship before anyone else noticed the icebergs.

Let's take your points one at a time:

1) You are not giving enough information in this example making it impossible to answer. Furthermore, it fails to show how housing drops and bad loan policy has led to many banks and other financial institutions to de-leverage.

The reality is that a person buys a house for $400,000 with a 100% loan. Pays about 24 months of interest which is about $48,000. Pays property taxes etc.... then has the house foreclosed upon.

Now that person is likely unable to buy another house for many more years (assuming mortgages become regulated properly again) due to a poor credit score. The person is out the interest payments and moving costs etc...

The bank is out the foreclosure costs (often $50,000+) and the difference between what it lent out and what it will get on the house (since the difference is not going to be paid back in the real world).

So the bank is out, say, $150,000 in foreclosure costs and bad loan costs (a 25% drop in house prices is becoming normal according to Case-Schiller).

This has a large effect as this happens to banks across the US and they have no choice but to de-leverage.

2) Oil going down generally is a good thing. If it is going down due to demand destruction then no, it is not a problem.

If it is going down because of a panicky market then yes, it is a problem.

The fact that you are unable to make this distinction is laughable.

3) This is even more laughable. The US has already had zero real interest rates for months now (at least).

A 2% nominal rate is pretty close to a ZIRP policy.

The key, however, is whether or not we continue on with negative real interest rates (whereby the Fed keeps the rate at 2% while printing so much "bail out" money as to cause inflation to stay at current levels or go higher) or if we end up with deflation thanks to the de-leveraging going on (whereby the Fed lowers interest rates further to deal with deflation coming from the low to negative growth in broad money supply due de-leveraging).

As for real estate - you can try and focus the blame on any asset class you want - it still comes back to an irresponsible Fed and Congress who put regulations in place at the wrong time and wrong place.

Smart regulation is what was/is needed and the Fed/US Government/US accounting standards continue to deal with this in a piecemeal and opaque fashion.

The fact remains - loans were made that never should have been made. Securities were packaged and "rated" that never should have been packaged together and/or never have been rated as triple "A."

[msj]

Late to the game?

msj, before you joined this forum, I started a thread (in September 2006) entitled: "Impending Recession - How deep? How bad? When"

I'm not denying the gravity of the financial shenanigans south of the border. But it seems to me the key question is whether changing paper values have any major effect on people's efforts in the real world. As it is, the sun rose yesterday, the tides still rose and fell and the vast majority of Americans got up, went to work and produced something of value for the rest of humanity. They got on with life.

Unemployment remains low, inflation is low and inflationary expectations are low. Businesses are devising new projects and planning new investments. There are hybrid cars, new cell phones, the human genome has been uncovered. Life goes on.

In a sense, it is not surprising that the financial sector is undergoing major changes. Computers have radically changed their business in the past 25 years or so - from ATMs to online banking, from spreadsheets to email.

Around the world, because of this financial crisis, people are now afraid to do otherwise good deals. So, as a start to overcome this fear, I'll offer you a deal msj. If you'll drop the personal innuendo, I promise not to insult you too. I think our deal will make the world a better place, or at elast this forum.

Yes, paper values do matter especially when the financiers screw up the timing!

Unemployment, since you have not noticed, has been declining for 7 or so months in a row.

Inflation is relatively high right now and the US has been running real negative interest rates for some time (with no apparent effect on unemployment).

Sure, businesses are planning new projects - the Big 3 are begging the US government for $50 Billion just to stay solvent.

It is laughable what people believe.

The real economy is slowing down and you, like McCain's former economics adviser, prefer not to see it this way despite all of the evidence.

As for people being afraid - why don't you put up or shut up.

If there are so many good deals out their then why don't you put up your money into these deals?

The problem has been a liquidity crisis in the debt markets since August 2007.

The problem is further exacerbated by people like you claiming their is nothing to see here so just keep on investing.

Yeah, ask the people who have injected capital into these financial companies how far speculating (which is what you are really advocating) has gotten them.

Once again - if you believe that financial companies are being ruined because of the use of spreadsheets and email then you really are way out of touch with reality....that is called blaming one's tools.

[msj]

Now then, if you want my opinion of this latest AIG bail out, here's Ken Rogoff.

What does this article have to do with the AIG bailout?

Other then to step around it because it was probably written Monday night prior to the announced AIG "loan" bail out?

Sure, Rogoff is a good guy but this is not even one of his worst efforts at writing for the MSM.

Basically the article states that the government isn't a bunch of creampuffs because they didn't bail out LB.

This is then refuted on the very same day that the article is published as the government bails out AIG.

And once again I laugh.

[kengs333]

The price of precious metals has plunged over the last few months.

So much for that.

I don't think that's the point. If you have a gold coin and the economy goes to pot it has value whereas specie and investments on paper become worthless.

Also, the value of gold increased $75 dollars today.

[WIP]

Funny how many Bloombreg, BNN, etc analsysts are now crawling out of the woodwork to tell us that: It's all Greenspan's fault (LOL), it's all the government's fault (LOL - how often have we heard them tell us that life would be so much better if the government would just get out of our hair?).

You're right. Nobody knows how much risk is now in the markets, and that is exactly the problem. If you cannot quantify risk, then how to you value the market?

Captialism. Ain't it grand? The mighty US of A has damned near destroyed the world. The Russian market has had to close two days in a row because there was no way to make the market.

I'm no financial whiz, but even I can see that the latest round in defaults follows the same pattern as the crisis in sub-prime loans -- all made possible by deregulation. Many of these rules that banks and investment firms thought were interfering with business, were put in place for a reason during the 1930's, and along with deposit insurance, they were supposed to ensure confidence in the banking system. Now, it's like the 1920's all over again!

The AIG collapse (bailout my a$$ - they have been given 24 months to liquidate themselves) shows you how bad the situation has become. 50% of their business was in Europe. Their insurance business was underwriting much of the financial community. For example, AIG had insured the rent of Lehman Brothers London HQ for 4 years in advance in the event that Lehman collapsed. A house of cards.

We'll be damned lucky if we get out of this without a worldwide financial collapse.

As one analyst put it on Bloomberg this morning: "Sooner or later, the Fed is going to run out of money". Indeed. Numbers are not looking very good at the moment. Apparently the market agrees with this guy. The US government is still triple A. How long can it last?

And the wind whispers.... Boooosh!

I heard today that much of AIG's troubles come as a result of insuring subprime loans. When real estate prices were going up, this was a guaranteed cashcow; now they've been left holding the bag for many mortgages that have defaulted.

[White Doors]

I don't agree. We should be making things better within a publicly funded system. people shouldn't be different just because they have money. And just so you know, my family would be able to afford private care, but I don't support it unless it is funded under the public umbrella and I think that you would find a great many Canadians feel that way. I know there are private clinics now, but I really don't agree with it as it competes with and takes away from the publicly funded system.

By what authority do you feel that you have the right to deny someone their right to pay for health services shoudl they feel like they would like to? Certainly the Quebec Supreme Court does not agree with you and cited the Charter of Rights and freedoms in it's decision. You can have private, user pay services and have a better universal system. One only needs to look at pretty much any other European system to see that it's true.

Predictably, opponets like Hisself, cite the American system which is private only (for the most part).

That dichotomy is what has left us stuck in the 1960's. It's time we grow up and move on as a country.

If you disagree with a private, user pay system, it's pretty simple - Don't use it.

[Argus]

I don't think that's the point. If you have a gold coin and the economy goes to pot it has value whereas specie and investments on paper become worthless.

Also, the value of gold increased $75 dollars today.

Which is nice unless you paid $1000 an once for it a few months ago. There's no sure thing in investments.

[Smallc]

If you disagree with a private, user pay system, it's pretty simple - Don't use it.

We're not going to agree on such a thing. People of different ideologies usually can't see eye to eye on this. In this case, it should be up to the people to decide. We should hold a referendum on how to proceed.

Edited September 18, 2008 by Smallc

[White Doors]

We're not going to agree on such a thing. People of different ideologies usually can't see eye to eye on this. In this case, it should be up to the people to decide. We should hold a referendum on how to proceed.

The difference being, of course, my ideology is not taking any rights away from people that are protected under the Charter of Rights and Freedoms - and your ideology is.

Something for you to think about, I'd say.

Edited September 18, 2008 by White Doors

[sharkman]

What does this article have to do with the AIG bailout?

Other then to step around it because it was probably written Monday night prior to the announced AIG "loan" bail out?

Sure, Rogoff is a good guy but this is not even one of his worst efforts at writing for the MSM.

Basically the article states that the government isn't a bunch of creampuffs because they didn't bail out LB.

This is then refuted on the very same day that the article is published as the government bails out AIG.

And once again I laugh.

Yeah, why don't you have a good yuck you arrogant bastard. You are so full of yourself why don't you explain how it can be that economists are disagreeing with you on how to solve this thing. I know, I know, because the ones that disagree with you are all wrong, eh?

[Smallc]

The difference being, of course, my ideology is not taking any rights away from people that are protected under the Charter of Rights and Freedoms - and your ideology is.

Something for you to think about, I'd say.

If the waits were eliminated it would not infringe on anything in the charter as far as I can see. As it is right now, it may in some provinces, but if it were improve it wouldn't.

I don't believe in private care because it gives something to some that others can't have. We all have the same right to live, so why should some have special treatment?

Given that though, I still think it should be up to the people to decide in this case.

Edited September 19, 2008 by Smallc