Former superstar Federal Reserve Chairman Alan Greenspan is now being severely criticized for playing a crucial role in causing the current economic meltdown. What did he do that was so wrong?
In the early 2000's, he offered money plentiful and cheap. This set-off the loans to many people who couldn't afford them by banks and other financial institutions and began the major run-up in housing prices, as well as the rest of today's financial ills.
Aside from blaming Mr. Greenspan have we learned anything from this fiasco? It seems not. In a rush to rescue the economy current Fed Chairman Ben Bernanke is pumping enormous amounts of cheap money into the economy.
And he slashed interest rates to the low levels of Mr. Greenspan in 2003-04. Substantial amounts of that money are flowing to companies who for now can't afford to pay it back such as AIG and General Motors.
Meanwhile, despite promises by Treasury Secretary Henry Paulson and other government officials there is no additional regulation to protect the public.
So who would be silly enough to want to repeat what caused the current potential collapse? Wall Street. Based upon rumors of the latest interest rate cuts, on Wednesday their speculators drove the Dow Jones Industrial Average up 889 points, the second highest one day rise ever.
These interest rate cuts are being done without analysis of what benefits to the public all the other recent interest rate cuts have brought. Judging by the need for a massive corporate bailout, it would appear the benefits if any have been few.
Dick
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