From the Greenspan Archive: We Were Undercapitalized for 40 or 50 Years
How can an economic system be chronically undercapitalized for "40 or 50 years"? There's only supposed to be as much money as there is demand for that money, right? Someone has to pay for something and sometimes they have to borrow money to get the things they want. That's fine, it creates more demand for money (Someone A has to get the money to pay Someone B for the things they wanted but couldn't afford and ends up paying both for the things and the interest on the money used to get the things) and supposedly our friends at the Fed are there watching that. Did any of these 40 to 50 years involve Greenspan?
I can't believe this asshole says some of this shit out loud sometimes.
“During the past 18 months, there were very few instances of serial default and contagion that could have not been contained by adequate risk-based capital and liquidity,” he said. In response to a question, Greenspan said “we were undercapitalized in the banking system for maybe 40 or 50 years.”
Maybe I'm completely off but I read that to mean all we have to do is continue to throw a whole shit ton of dirty Fed money out there and that could totally fix these rotting cesspools of residential real estate popping and fizzing around America.
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The Google Maps foreclosure dots look slightly less contagious than they did last time I checked but it still looks like an outbreak out there.
Here's a solution since we're just making shit up: rent out foreclosed homes and make "owners" responsible for collecting the payments and returning the majority to whomever owns the mortgage (you know, like normal fucking homedebtors do minus the rent). Make these nearly foreclosed but rented out homes like operating leases so struggling CRE companies can pick them up and make a percentage from rents for holding them. It's genius. Fuck it! Otherwise bulldoze half of them and call the housing problem "corrected".
Good thing Greenspan fixed that little undercapitalization problem by opening Pandora's box on all sorts of creative blip-creating genius. Greenspan is the libertarian of the century for freeing the dollar, aren't you glad he decoupled it from gold? Maybe that's when we stopped being undercapitalized. It was genius, he should be considered a hero. He certainly considers himself one.
Previously from the Greenspan Archive: Don't let the masses catch on to this housing bubble thing