David Stockman : 2008 Economic Depression Caused by Federal Reserve Board

[Contumacious]

David A. Stockman – “The Great Deformation – The Corruption of Capitalism in America”

Myth one: The 2008 financial crisis was the result of unregulated markets. TARP and the Fed saved the country from Great Depression 2.0

Nonsense, says Stockman. The financial crisis was the consequence of the Fed’s serial bubble blowing, and it should have been allowed to burn itself out in the corridors of Wall Street. Instead, Paulson and Bernanke panicked, declared economic martial law, namely that all rules of fiscal prudence and free market capitalism be tossed aside, and demanded that, via the bail-out of ‘insurance’ giant AIG, firms like Goldman Sachs, Morgan Stanley and others be saved from choking on their own outsized speculations."

.

 

[TakeAStepBack]

We've known this for the last 12 years or more. Stockman woke up one day and decided to pay attention and now it is noteworthy?

 

[g5000]

David A. Stockman – “The Great Deformation – The Corruption of Capitalism in America”

Myth one: The 2008 financial crisis was the result of unregulated markets. TARP and the Fed saved the country from Great Depression 2.0

Nonsense, says Stockman. The financial crisis was the consequence of the Fed’s serial bubble blowing, and it should have been allowed to burn itself out in the corridors of Wall Street. Instead, Paulson and Bernanke panicked, declared economic martial law, namely that all rules of fiscal prudence and free market capitalism be tossed aside, and demanded that, via the bail-out of ‘insurance’ giant AIG, firms like Goldman Sachs, Morgan Stanley and others be saved from choking on their own outsized speculations."

.

Instead of reading some partisan hack's third person interpretation of a Stockman book, read Stockman's own words:

David Stockman: Days of Crony Capitalist Plunder

Accordingly, banks which were "too big to fail" couldn't be busted up, since they were allegedly needed to shovel more credit onto already debt-saturated household and business balance sheets. Likewise, speculators who should have suffered epochal losses during the meltdown were resuscitated by Fed-engineered zero interest rates in the money market, thereby quickly reviving the same massively leveraged "carry trades" in commodities, currencies, equities, derivatives, and other risk assets which had brought on the crisis in the first place.

 

[TakeAStepBack]

Accordingly, banks which were "too big to fail" couldn't be busted up, since they were allegedly needed to shovel more credit onto already debt-saturated household and business balance sheets. Likewise, speculators who should have suffered epochal losses during the meltdown were resuscitated by Fed-engineered zero interest rates in the money market, thereby quickly reviving the same massively leveraged "carry trades" in commodities, currencies, equities, derivatives, and other risk assets which had brought on the crisis in the first place.

in other words, the federal reserve was responsible for the mess and then perpetuated it by bailing out firms that should have went belly up.

 

[g5000]

The Fed's low interest rates faciliated the crash. They were not the sole cause of the crash. Stockman knows this.

The FSMA and the CFMA also greased the skids. Congress legalized gambling by the banks. Literally. They exempted banks from state laws regulating casinos and bucket shops. I kid you not. And not one states rights blowhard uttered so much as a whisper in protest.

The unanimous decision by the SEC to ease capital reserve requirements for the top five Wall Street broker dealers also led to the crash.

The ability to hide toxic assets inside complex derivatives which were in extremely high demand led to the crash.

And then just a plain old-fashioned culture of fraud and corruption led to the crash.

 

[blastoff]

Stick around to see the fallout from the Fed pumping billions into the NYSE, Nasdaq, etc.

The low information morons hear about a record setting 15k for the Dow and swallow the baloney that it's a sign of our recovering economy, the worst is behind us, yada, yada, yada.

Meanwhile, savvy investors plot their strategeries to take advantage of the rising market(s) and then bail before the stuff hits the fan again, which it most definitely will. And could be quite ugly by our standards.

 

[TakeAStepBack]

The Fed's low interest rates faciliated the crash. They were not the sole cause of the crash. Stockman knows this.

The FSMA and the CFMA also greased the skids. Congress legalized gambling by the banks. Literally. They exempted banks from state laws regulating casinos and bucket shops. I kid you not. And not one states rights blowhard uttered so much as a whisper in protest.

The unanimous decision by the SEC to ease capital reserve requirements for the top five Wall Street broker dealers also led to the crash.

The ability to hide toxic assets inside complex derivatives which were in extremely high demand led to the crash.

And then just a plain old-fashioned culture of fraud and corruption led to the crash.

Without the manipulation of interest rates and loose credit, the remaining "causes" would have been rendered useless.

And the ability to bundle toxic assets within other securities was the conduit of how the mortgage crisis permeated the markets. it wasn't the cause of it. The bundling came after firms became aware that VaR models were wrong and they were sitting on a pile of toxicity.

The root cause was monetary policy and congressional "homeownership" lending mandates.

 

[g5000]

The bundling came after firms became aware that VaR models were wrong and they were sitting on a pile of toxicity.

Nonsense. Mortgages were being bundled into CDOs from the beginning of the 2000s.

 

[g5000]

The root cause was monetary policy and congressional "homeownership" lending mandates.

This is also nonsense. I laugh every time I hear the bullshit CRA meme and its variants. It's a dead giveaway the speaker is completely ignorant.

Wall Street ran out of prime borrowers long before the demand for derivatives products could be met. So they threw the underwriting laws of the Universe out the window to meet that demand, which meant going after less and less viable borrowers in order to find assets to bundle into the derivatives.

Sorry, fool, but neither Lehman Brothers nor Goldman Sachs nor Bear Stearns nor JP Morgan nor Morgan Stanley were subject to "congressional lending mandates". Period. And Wall Street made up more than half the secondary market by 2005. The GSEs market shares were shrinking by then, and continued shrinking until everything blew up.

Nor were the thousands of GLOBAL banks which were packaging and selling the same derivatives products subject to "congressional lending mandates".

The "congressional mandate" idiots always forget this was a GLOBAL derivatives bubble, and that financial firms all over the industrial world blew up.

 

[TakeAStepBack]

I've gone over this topic way too many times to give a fuck about playing out the details with an overly arrogant poster.

The root cause of the burst was the bubble itself. That bubble was created by lowering interest rates to spur moribund investing coming out of the dotcom bubble burst by the federal reserve. That eased lending and additional M2 went into....real estate. Part of that was a reflection of both lenders and the mandates to lend that were handed down in the 1990s from Clinton, and then expanded again in 99. Then ramped up again by Bush and congress. The GSEs played their part in it too.

When interest rates were raised again, the bubble burst. As they always do. the details of how it permeated the markets the world over are of little significance beyond that point.

 

[jwoodie]

Why beat around the bush? Subprime lending, encouraged by the government, led to the real estate bubble and subsequent collapse. What do you think the derivatives and bundled securities were filled with? Bad mortgages.

 

[KnobbyWalsh]

The Fed's low interest rates faciliated the crash. They were not the sole cause of the crash. Stockman knows this.

The FSMA and the CFMA also greased the skids. Congress legalized gambling by the banks. Literally. They exempted banks from state laws regulating casinos and bucket shops. I kid you not. And not one states rights blowhard uttered so much as a whisper in protest.

The unanimous decision by the SEC to ease capital reserve requirements for the top five Wall Street broker dealers also led to the crash.

The ability to hide toxic assets inside complex derivatives which were in extremely high demand led to the crash.

And then just a plain old-fashioned culture of fraud and corruption led to the crash.

It was a factor, and it helped cause the whole housing scam that fucked things up. There were many factors, but that's a huge part.

 

[Contumacious]

We've known this for the last 12 years or more. Stockman woke up one day and decided to pay attention and now it is noteworthy?

Unfortunately , when we say it , the zombified populace claims that we are just loony Libertarians.

Now that the establishment acknowledges that we were right, again, we can rub it in and emphatically shout we fucking told you so !!!!!!!!!!!!!!!!!!

.

 

[KnobbyWalsh]

I've gone over this topic way too many times to give a fuck about playing out the details with an overly arrogant poster.

The root cause of the burst was the bubble itself. That bubble was created by lowering interest rates to spur moribund investing coming out of the dotcom bubble burst by the federal revserve. When interest rates were raised again, the bubble burst. As they always do. the details of how it permeated the markets the world over are of little significance beyond that point.

And Clinton and Bush wanting to put every goddamned minority and poor person into a home they couldn't afford, their "slice of the American Dream" as Bush said. Yea, more like "slice of a Philadelphia Lawyer's wet dream!"

 

[KnobbyWalsh]

We've known this for the last 12 years or more. Stockman woke up one day and decided to pay attention and now it is noteworthy?

Unfortunately , when we say it , the zombified populace claims that we are just loony Libertarians.

Now that the establishment acknowledges that we were right, again, we can rub it in and emphatically shout we fucking told you so !!!!!!!!!!!!!!!!!!

.

Condom, they've never been right - about nothing.

 

[TakeAStepBack]

We've known this for the last 12 years or more. Stockman woke up one day and decided to pay attention and now it is noteworthy?

Unfortunately , when we say it , the zombified populace claims that we are just loony Libertarians.

Now that the establishment acknowledges that we were right, again, we can rub it in and emphatically shout we fucking told you so !!!!!!!!!!!!!!!!!!

.

Condom, they've never been right - about nothing.

What?

 

[g5000]

I've gone over this topic way too many times to give a fuck about playing out the details with an overly arrogant poster.

The root cause of the burst was the bubble itself. That bubble was created by lowering interest rates to spur moribund investing coming out of the dotcom bubble burst by the federal revserve. When interest rates were raised again, the bubble burst. As they always do. the details of how it permeated the markets the world over are of little significance beyond that point.

And Clinton and Bush wanting to put every goddamned minority and poor person into a home they couldn't afford, their "slice of the American Dream" as Bush said. Yea, more like "slice of a Philadelphia Lawyer's wet dream!"

As the underwriting laws of the Universe were tossed out the window so Wall Street could pursue less and less viable borrowers, the politicians did what politicians do, which is to take credit for the effects of Wall Street's lax lending policies.

The politicians weren't forcing Lehman Brothers to lower their standards. The politicians were riding Wall Street's coattails, and doing all they could to grease the skids for them by deregulating derivates completely, and exempting them from the states' CASINO regulations.

This title shall supersede and preempt the
application of any State or local law that prohibits or regulates
gaming or the operation of bucket shops (other than antifraud provisions
of general applicability) in the case of—
(1) a hybrid instrument that is predominantly a banking
product; or
(2) a covered swap agreement.

 

[g5000]

There's a reason you are not allowed to buy a fire insurance policy on your neighbor's house, or a life insurance policy on your neighbor.

The arson and murder rate would skyrocket.

And yet with that section I just quoted, anyone could bet on your mortgage burning down. Including the people who build your mortgage.

What if I was a home builder and I was allowed to bet on the house burning down that I just built and sold to some rube?

Gee, I wonder how that would turn out? Hmmmmm...

 

[Contumacious]

David A. Stockman – “The Great Deformation – The Corruption of Capitalism in America”

Myth one: The 2008 financial crisis was the result of unregulated markets. TARP and the Fed saved the country from Great Depression 2.0

Nonsense, says Stockman. The financial crisis was the consequence of the Fed’s serial bubble blowing, and it should have been allowed to burn itself out in the corridors of Wall Street. Instead, Paulson and Bernanke panicked, declared economic martial law, namely that all rules of fiscal prudence and free market capitalism be tossed aside, and demanded that, via the bail-out of ‘insurance’ giant AIG, firms like Goldman Sachs, Morgan Stanley and others be saved from choking on their own outsized speculations."

.

Instead of reading some partisan hack's third person interpretation of a Stockman book, read Stockman's own words:

David Stockman: Days of Crony Capitalist Plunder

Accordingly, banks which were "too big to fail" couldn't be busted up, since they were allegedly needed to shovel more credit onto already debt-saturated household and business balance sheets. Likewise, speculators who should have suffered epochal losses during the meltdown were resuscitated by Fed-engineered zero interest rates in the money market, thereby quickly reviving the same massively leveraged "carry trades" in commodities, currencies, equities, derivatives, and other risk assets which had brought on the crisis in the first place.

Why?

I want to show the world that the narcotized is finally noticing reality.

.

 

[Contumacious]

Accordingly, banks which were "too big to fail" couldn't be busted up, since they were allegedly needed to shovel more credit onto already debt-saturated household and business balance sheets. Likewise, speculators who should have suffered epochal losses during the meltdown were resuscitated by Fed-engineered zero interest rates in the money market, thereby quickly reviving the same massively leveraged "carry trades" in commodities, currencies, equities, derivatives, and other risk assets which had brought on the crisis in the first place.

in other words, the federal reserve was responsible for the mess and then perpetuated it by bailing out firms that should have went belly up.

The Federal Reserve Board was responsible for every economic depression since 1913. The US Treasury was responsible for every downturn prior to 1913.

.