The Guardian UK: "Twenty-five people at the heart of the meltdown ..." - Guess who tops the list.

[Bozita]

http://www.guardian.co.uk/business/2009/jan/26/road-ruin-recession-individuals-economy

Twenty-five people at the heart of the meltdown ...
The worst economic turmoil since the Great Depression is not a natural phenomenon but a man-made disaster in which we all played a part. In the second part of a week-long series looking behind the slump, Guardian City editor Julia Finch picks out the individuals who have led us into the current crisis

Julia Finch with additional reporting by Andrew Clarke and David Teather
The Guardian, Monday 26 January 2009
Article history

Alan Greenspan, chairman of US Federal Reserve 1987- 2006
Only a couple of years ago the long-serving chairman of the Fed, a committed free marketeer who had steered the US economy through crises ranging from the 1987 stockmarket collapse through to the aftermath of the 9/11 attacks, was lauded with star status, named the "oracle" and "the maestro". Now he is viewed as one of those most culpable for the crisis. He is blamed for allowing the housing bubble to develop as a result of his low interest rates and lack of regulation in mortgage lending. He backed sub-prime lending and urged homebuyers to swap fixed-rate mortgages for variable rate deals, which left borrowers unable to pay when interest rates rose.

For many years, Greenspan also defended the booming derivatives business, which barely existed when he took over the Fed, but which mushroomed from $100tn in 2002 to more than $500tn five years later.

Billionaires George Soros and Warren Buffett might have been extremely worried about these complex products - Soros avoided them because he didn't "really understand how they work" and Buffett famously described them as "financial weapons of mass destruction" - but Greenspan did all he could to protect the market from what he believed was unnecessary regulation. In 2003 he told the Senate banking committee: "Derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so".

In recent months, however, he has admitted at least some of his long-held beliefs have turned out to be incorrect - not least that free markets would handle the risks involved, that too much regulation would damage Wall Street and that, ultimately, banks would always put the protection of their shareholders first.

He has described the current financial crisis as "the type ... that comes along only once in a century" and last autumn said the fact that the banks had played fast and loose with shareholders' equity had left him "in a state of shocked disbelief".

more...

[panAmerican]

1. Glad that they also credited Prof Roubini, among others, for foreseeing the problem

[HillbillyBob]

2. We bought a small abandoned farm in rural NC .

Closing two years ago Jan 20. When we were looking for a place we spoke to several brokers who kept pushing for us to get a larger APR mortgage. We saw this mess coming so we said we want in with as small of a mortgage and insisted on a fixed rate. We finally found a broker that would do as we wished.
Boy are we glad we listened to our own counsel.
We got into a 8 acre farmstead with a 4/3 house that was only 13 years old at the time for 75,000$ with a 30 yr fixed at 6.18%, we refi at 5.25% a year later, taking nothing out of equity. We are now paying less than half in payments than the rent was on a house in town.
We have past experience with hucksters selling funky mortgages, I got into a mortgage in 82 with a balloon payment and a crooked owner/realtor/seller(also a Baptist Minister).
Turned out he would collect payments for a few years and if you were 5 minutes late he would evict you and sell it to someone else, we saw it happen to a friend that bought from the same crook. We were there less than a year, we tried to get him to come clean on the balloon that was buried in the fine print.
Since it turned out to be an unlawful sale. He did not actually own the house we 'bought' we did lose the money we had paid in, it was about the same as a years rent.
We reported him to the reactors oversight agency. I don't know if anything ever came of it as I left nazibama never to return.
We are sorry to see so many folks are going to lose jobs and homes.
We know who is to blame, though an educated customer is hard to cheat.
It is time that anyone who may buy a homes be given a class or something and in their own best interests to find out just what they are getting into. Don't depend on one realtor, take a realtor's class, extension course or something before even looking for a home to buy.

[Festivito]

3. What? It has nothing to do with the April 2004 drop of rules limiting lending?

Banks were limited to lend only ten times what they had in ready cash. Six months before the November elections putting Bush back into office for his second term, banks were allowed to create as much cash as they could sell to the public, not limited to ten times their holdings.

And, only the top five banks.

And, it this decision was only reported by the "librul" media in October of 2008.

Liberal media my left butt cheek.

[donco6]

4. Derivatives always made me feel stupid.

But I feel better knowing Buffet and Soros didn't trust them, either.

[glitch]

5. Clinton, Bush, Brown but not Tony Blair? How'd he skate? nt

[muriel_volestrangler]

6. Blair left financial policy to Brown, as his Chancellor

Gordon Brown was generally thought to have been the most powerful chancellor the country has had.

[glitch]

7. And Bush ran financial policy here?

Likewise for Clinton. Are you saying Prime Minister and Chancellor are separate but equal entities in the UK?

[muriel_volestrangler]

8. I'm saying that Brown directed economics policy, and took the public responsibility for it

This is frequently commented on:

What Brown learned in the early 1990s he brought back to Britain, where he and Blair created New Labor and employed many Clinton-inspired techniques and policies -- not the least of which was the wisdom of moving a traditionally left-wing party to the political center. They won a landslide victory in 1997.

Blair, the telegenic communicator, became prime minister and, in a secret political deal endlessly speculated upon here, the brooding and wonkish Brown became chancellor of the exchequer, Britain's finance minister. Blair kept control of foreign policy and key areas such as education, but essentially ceded economic policy and much of the domestic agenda to Brown, who has become the longest-serving chancellor since the 1820s.

Brown's close friend and economic adviser, former U.S. Federal Reserve chairman Alan Greenspan, who has visited Brown in his Scottish home town of Kirkcaldy, once described him as "without peer among the world's economic policymakers."

http://www.washingtonpost.com/wp-dyn/content/article/2007/05/10/AR2007051002584_pf.html

While Blair may have nominally been responsible for all decisions by his government, economic policy was set by Brown, and he also had a lot of influence over other departments, because he set their budgets. Brown had the kind of influence that Cheney did under Bush, but acknowledged the influence publicly - he was keen to take over as PM after Blair. Perhaps Blair is lucky not to be in the list, but that's because he let Brown set the policy, rather than decisions he himself made. No cabinet member under Bush seems to have been so obviously the centre of economics decisions (Cheney or the Treasury Secretaries must have been making some decisions, but Greenspan seemed to be the public face), so they seem to have listed Bush as the public face of government decisions.

[jpak]

9. I never trusted Greenspan after he jacked up interest rates during Clinton's last term

There was absolutely no need for it...

:thumbsdown: