Thursday, October 23, 2008

Congressional Hearings: Who is to blame?

Do you have a credit card? Do you have debts? Are you still paying off your car or house? If so, you are part of a large system that borrowed itself out of the last financial crisis (in 1997). We merely postponed the pain and had record surges on stock exchanges. After record profits the pendulum swings the other way - always has, and always will? Who is to blame. Go and look in the mirror and quit fingerpointing finance ministers. We are all part of the problem, and problem is greed.
clipped from

Once praised as the "maestro" of the U.S. financial system during the 1990s economic boom, Greenspan, who was succeeded in 2006 by Ben Bernanke, was likely to find himself defending actions he took that are being blamed for contributing to the current crisis.

Critics charge that he left interest rates too low in the early part of this decade, spurring an unsustainable housing boom, while also refusing to exercise the Fed's powers to impose greater regulations on the issuance of new types of mortgages, including subprime loans. It was the collapse of these mortgages and rising defaults a year ago that triggered the current crisis.

Greenspan recently described the current episode as the type of wrenching financial crisis that comes along only once in a century. He has defended the use of derivatives, so-named because their value is derived from the value of an underlying asset. He said they were useful in helping to spread risks.

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