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  • New Road to Serfdom



    The New Road to Serfdom


    An illustrated guide to the coming real estate collapse

    By Michael Hudson


    Reprinted with permission of the author and



    Originally published May 2006

    Michael Hudson is Distinguished Professor of Economics at the University of Missouri, Kansas City and the author of many books, including "Super Imperialism: The Origin and Fundamentals of U.S. World Dominance."

    Nigel Holmes was the graphics director of Time magazine for sixteen years and is the author of Wordless Diagrams.
    "Even men who were engaged in organizing debt-serf cultivation and debt-serf industrialism in the American cotton districts, in the old rubber plantations, and in the factories of India, China, and South Italy, appeared as generous supporters of and subscribers to the sacred cause of individual liberty."
    - H. G. Wells, The Shape of Things to Come - (1936)
    Never before have so many Americans gone so deeply into debt so willingly. Housing prices have swollen to the point that we've taken to calling a mortgage–by far the largest debt most of us will ever incur–an "investment." Sure, the thinking goes, $100,000 borrowed today will cost more than $200,000 to pay back over the next thirty years, but land, which they are not making any more of, will appreciate even faster. In the odd logic of the real estate bubble, debt has come to equal wealth.

    And not only wealth but freedom–an even stranger paradox. After all, debt throughout most of history has been little more than a slight variation on slavery. Debtors were medieval peons or Indians bonded to Spanish plantations or the sharecropping children of slaves in the postbellum South. Few Americans today would volunteer for such an arrangement, and therefore would-be lords and barons have been forced to develop more sophisticated enticements.

    The solution they found is brilliant, and although it is complex, it can be reduced to a single word–rent. Not the rent that apartment dwellers pay the landlord but economic rent, which is the profit one earns simply by owning something. Economic rent can take the form of licensing fees for the radio spectrum, interest on a savings account, dividends from a stock, or the capital gain from selling a home or vacant lot. The distinguishing characteristic of economic rent is that earning it requires no effort whatsoever. Indeed, the regular rent tenants pay landlords becomes economic rent only after subtracting whatever amount the landlord actually spent to keep the place standing.

    Most members of the rentier class are very rich. One might like to join that class. And so our paradox (seemingly) is resolved. With the real estate boom, the great mass of Americans can take on colossal debt today and realize colossal capital gains—and the concomitant rentier life of leisure—tomorrow. If you have the wherewithal to fill out a mortgage application, then you need never work again. What could be more inviting—or, for that matter, more egalitarian?

    That’s the pitch, anyway. The reality is that, although home ownership may be a wise choice for many people, this particular real estate bubble has been carefully engineered to lure home buyers into circumstances detrimental to their own best interests. The bait is easy money. The trap is a modern equivalent to peonage, a lifetime spent working to pay off debt on an asset of rapidly dwindling value.

    Most everyone involved in the real estate bubble thus far has made at least a few dollars. But that is about to change. The bubble will burst, and when it does, the people who thought they would be living the easy life of a landlord will soon find that what they really signed up for was the hard servitude of debt serfdom.


    Mortgages account for most of the net growth in debt since 2000 - billions

    1 The new road to serfdom begins with a loan. Since 2003, mortgages have made up more than half of the total bank loans in America—more than $300 billion in 2005 alone. Without that growing demand, banks would have seen almost no net loan growth in recent years.


    A $1,000 monthly payment can carry different levels of debt

    2 Why is the demand for mortgage debt so high? There are several reasons, but all of them have to do with the fact that banks encourage people to think of mortgage debt in terms of how much they can afford to pay in a given month—how far they can stretch their paychecks—rather than in terms of the total amount of the loan. A given monthly payment can carry radically different amounts of debt, depending on the rate of interest and how long those payments last. The purchasing power of a $1,000 monthly payment, for instance, nearly triples as the debt lingers and the interest rate declines.


    3 As it happens, banks are increasingly unhurried about repayment. Nearly half the people buying their first homes last year were allowed to do so with no money down, and many of them took out so-called interest-only loans, for which payment of the actual debt—amortization—was delayed by several years. A few even took on “negative amortization” loans, which dispense entirely with payments on the principal and require only partial payment of the interest itself. (The extra interest owed is simply added to the total debt, which can grow indefinitely.) The Federal Reserve, meanwhile, has been pushing interest rates down for more than two decades.


    corporations hide their real estate profits behind depreciation

    4 The IRS has helped create demand for debt as well by allowing tax breaks—the well-known home-mortgage deduction, for instance—that can transform a loan into an attractive tax shelter. Indeed, commercial real estate investors hide most of their economic rent in “depreciation” write-offs for their buildings, even as those buildings gain market value. The pretense is that buildings wear out or become obsolete just like any other industrial investment. The reality is that buildings can be depreciated again and again, even as the property’s market value increases.


    the tax burden has shifted from property to labor and consumption

    5 Local and state governments have done their share too, by shifting the tax burden from property to labor and consumption, in the form of income and sales taxes. Since 1929, the proportion of tax burden has almost completely reversed itself.


    real estate prices have far outpaced national income

    6 In recent years, though, the biggest incentive to home ownership has not been owning a home per se, or even avoiding taxes, but rather the eternal hope of getting ahead. If the price of a $200,000 house shoots up 15 percent in a given year, the owner will realize a $30,000 capital gain. Many such owners are spending tomorrow’s capital gain today by taking out home-equity loans. For families whose real wages are stagnant or falling, borrowing against higher property prices seems almost like taking money from a bank account that has earned dividends. In a study last year, Alan Greenspan and James Kennedy found that new home-equity loans added $200 billion to the U.S. economy in 2004 alone.


    capital gains are taxed at a lower rate than ever - top rate

    7 It is also worth noting that capital gains—economic rent “earned” without any actual labor or industrial investment—are increasingly untaxed.


    housing prices have far outpaced consumer prices, even as monthly
    payments remain affordable


    8 All of these factors have combined to lure record numbers of buyers into the real estate market, and home prices are climbing accordingly. The median price of a home has more than doubled in the last decade, from $109,000 in 1995 to a peak of more than $206,000 in 2005. That growth far out-paces the consumer price index, and yet housing affordability—the measure of those month-to-month housing costs—has remained about the same.


    mortgage debt is rising as a proportion of gdp

    9 That sounds like good news. But those rising prices also mean that more people owe more money to banks than at any other time in history. And that’s not just in terms of dollars—$11.8 trillion in outstanding mortgages—but also as a proportion of the national economy. This debt is now on track to surpass the size of America’s entire gross domestic product by the end of the decade.


    the production/consumption economy

    10 Even that huge debt might not seem so bad, what with those huge capital gains beckoning from out there in the future. But the boom, alas, cannot last forever. And when the growth ceases, the market will collapse. Understanding why, though, requires a quick detour into economic theory. We often think of “the economy” as no more than a closed loop between producers and consumers. Employers hire workers, the workers create goods and services, the employers pay them, and the workers use that money to buy the goods and services they created.


    the keynesian economy


    11 As we have seen, though, the government also plays a significant role in the economy. Tax hikes drain cash from the circular flow of payments between producers and consumers, slowing down overheated economies. Deficit spending pumps more income into that flow, helping pull stalled economies out of recession. This is the classical policy model associated with John Maynard Keynes.


    the FIRE economy

    12 A third actor also influences the nation’s fortune. Economists call it the FIRE sector, short for finance, insurance, and real estate. These industries are so symbiotic that the Commerce Department reports their earnings as a composite. (Banks require mortgage holders to insure their properties even as the banks reach out to absorb insurance companies. Meanwhile, real estate companies are organizing themselves as stock companies in the form of real estate investment trusts, or REITs—which in turn are underwritten by investment bankers.) The main product of these industries is credit. The FIRE sector pumps credit into the economy even as it withdraws interest and other charges.


    the miracle of compound interest

    13 The FIRE sector has two significant advantages over the production/consumption and government sectors. The first is that interest wealth grows exponentially. That means that as interest compounds over time, the debt doubles and then doubles again. The eighteenth-century philosopher Richard Price identified this miracle of compound interest and observed, somewhat ruefully, that had he been able to go back to the day Jesus was born and save a single penny—at 5 percent interest, compounded annually—he would have earned himself a solid gold sphere 150 million times bigger than Earth.


    the rentier economy


    14 The FIRE sector’s other advantage is that interest payments can quickly be recycled into more debt. The more interest paid, the more banks lend. And those new loans in turn can further drive up demand for real estate—thereby allowing homeowners to take out even more loans in anticipation of future capital gains. Some call this perpetual-motion machine a “post-industrial economy,” but it might more accurately be called a rentier economy. The dream is that the FIRE sector will expand to embrace the fortune of every American—that we need not work or produce anything, or, for that matter, invest in new technology or infrastructure for the nation. We certainly need not pay taxes. We need only participate in the boom itself. The miracle of compound interest will allow every one of us to be a rentier, feasting on interest, dividends, and capital gains.


    rich people are getting a bigger share of overall economic rent

    15 In reality, alas, we can’t all be rentiers. Just as, in Voltaire’s phrase, the rich require an abundant supply of the poor, so too does the rentier class require an abundant supply of debtors. There is no other way. In fact, the vast majority of Americans have seen their share of the rental pie decrease over the last two decades, even as the real estate pie as a whole has expanded. Everyone got a little richer, but rich people got much, much richer.


    the miracle of compound interest will inevitably confront the s-curve of reality

    16 We will be hard-pressed to maintain even this semi-blissful state. Like any living organism, real economies don’t grow exponentially, or even in a straight line. They taper off into an S-curve, the victim of their own successes. When business is good, the demand for labor, raw materials, and credit increases, which leads to large jumps in wages, prices, and interest rates, which in turn act to depress the economy. That is where the miracle of compound interest founders. Although many people did save money at interest two thousand years ago, nobody has yet obtained even a single Earth-volume of gold. The reason is that when a business cycle turns down, debtors cannot pay, and so their debts are wiped out in a wave of bankruptcy along with all the savings invested in these bad loans.


    in japan, real estate prices fell as quickly as they rose

    17 Japan learned this lesson in the Nineties. As the price of land went up, banks lent more money than people could afford to pay interest on. Eventually, no one could afford to buy any more land, demand fell off, and prices dropped accordingly. But the debt remained in place. People owed billions of yen on homes worth half that—homes they could not sell. Many commercial owners simply went into foreclosure, leaving the banks not only with “non-performing loans” that were in fact dead losses but also with houses no one wanted—or could afford—to buy. And that lack of incoming interest also meant that banks had no more reserves to lend, which furthered the downward spiral. Britain’s similarly debt-burdened economy inspired a dry witticism: “Sorry you lost your job. I hope you made a killing on your house.”


    interest rates are on the rise

    18 We have already reached our own peak. As of last fall, even Alan Greenspan had detected “signs of froth” in the housing market. Home prices had “risen to unsustainable levels” in some places, he said, and would have exceeded the reach of many Americans long ago if not for “the dramatic increase in the prevalence of interest-only loans” and “other, more exotic forms of adjustable-rate mortgages” that “enable marginally qualified, highly leveraged borrowers to purchase homes at inflated prices.” If the trend continues, homeowners and banks alike “could be exposed to significant losses.” Interest rates, meanwhile, have begun to creep up.


    the annual sale of existing homes has more than doubled since 1989 - millions of homes

    19 So: America holds record mortgage debt in a declining housing market. Even that at first might seem okay—we can just weather the storm in our nice new houses. And in fact things will be okay for homeowners who bought long ago and have seen the price of their homes double and then double again. But for more recent homebuyers, who bought at the top and who now face decades of payments on houses that soon will be worth less than they paid for them, serious trouble is brewing. And they are not an insignificant bunch.


    negative equity traps debtors

    20 The problem for recent homebuyers is not just that prices are falling; it’s that prices are falling even as the buyers’ total mortgage remains the same or even increases. Eventually the price of the house will fall below what homeowners owe, a state that economists call negative equity. Homeowners with negative equity are trapped. They can’t sell—the declining market price won’t cover what they owe the bank—but they still have to make those (often growing) monthly payments. Their only “choice” is to cut back spending in other areas or lose the house—and everything they paid for it—in foreclosure.

    Free markets are based on choice. But more and more homeowners are discovering that what they got for their money is fewer and fewer choices. A real estate boom that began with the promise of “economic freedom” almost certainly will end with a growing number of workers locked in to a lifetime of debt service that absorbs every spare penny. Indeed, a study by The Conference Board found that the proportion of households with any discretionary income whatsoever had already declined between 1997 and 2002, from 53 percent to 52 percent. Rising interest rates, rising fuel costs, and declining wages will only tighten the squeeze on debtors.



    But homeowners are not the only ones who will pay. The overall economy likely will shrink as well. That $200 billion that flowed into the “real” economy in 2004 is already spent, with no future capital gains in the works to fuel more such easy money. Rising debt-service payments will further divert income from new consumer spending. Taken together, these factors will further shrink the “real” economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagnation or worse. Then only the debt itself will remain, a bitter monument to our love of easy freedom.

    Chart Sources
    1 Federal Reserve; 2 Lendingtree.com mortgage calculator; 3 Freddie Mac; 4,5 Bureau of Economic Analysis; 6 Federal Reserve and Bureau of Economic Analysis; 7 U.S. Treasury Department; 8 Moody’s Economy.com and Bureau of Labor Statistics; 9 Federal Reserve and Bureau of Economic Analysis; 15 Center on Budget and Policy Priorities; 17 Japan Real Estate Institute; 18 Federal Housing Finance Board; 19 National Association of Realtors.


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    Last edited by FRED; 05-13-10, 12:33 AM.
    Ed.

  • #2
    Re: New Road to Serfdom

    of course the outcome could be different from a crash.

    1. Virulent wage and goods price inflation

    2. Mortgage money remains relatively easy due to government and central bank intervention.


    3. Over about 4 or 5 years, wages raise the affordability to the extent that today's "inflated" prices are "reasonable" according to historically standard gauges of affordability.

    I don't really believe this, but I can see how it is a possibility.

    The fly in the ointment is, I think, real interest rates which today I think are negative. If they rise, that could mess things up in a big way. Dr. Hudson's presentation here was done a year or so ago and interest rates were rising. But as we can now see, they really haven't risen especially on the long end of things. It is possible that long rates will fall. So this "bailout through wage inflation" may come to pass, who knows?

    Comment


    • #3
      Re: New Road to Serfdom

      i have been taking the inflationist position on the basis of bernanke's "how to keep it[deflation] from happening here" speech, in which he basically said the fed will monetize any and all kinds of assets if need be, to prevent deflation. but on consideration, i think i am being too macro in my thinking. because even if the fed monetizes, say first by direct purchase of treasuries at long maturities, and even buys gse bonds, they might succeed in dropping mortgage rates but i'm not sure that would be sufficient to restart a bousing bubble. i doubt it, actually. simultaneously the dollar would be dropping and i've got to ask, 'where would the liquidity go?' we might get a dollar carry-trade - low rate borrowing in dollars as well as cash generated via sales of dollar-based debt instruments, with the proceeds going abroad for investment, further weakening the dollar. but it would take quite a drop for dollar based wages here to become globally competitive. i don't foresee much of the liquidity going into wages [any disagreement here would be welcome]. meanwhile oil and other globally traded goods would go through the roof, which means food prices also shoot up. so it's pretty easy to conjecture the u.s. consumer being tapped out paying the mortgage [though arms would get cheaper again], food, heat and transportation.

      maybe ej and rick ackerman will be able to sort this all out in their forthcoming debate.

      Comment


      • #4
        Re: New Road to Serfdom

        Nice article by Richard C. Cook at Global Research -- "Time to Change America by Challenging Economic Fundamentals"

        Amid claims that Federal Reserve Chairman Ben Bernanke has engineered a "soft landing" by holding interest rates steady after the downturn of the housing market, he told the Senate Banking Committee on February 14, "The current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation." But the sense of middle class voters that their standard of living is on a slippery slope downward was a factor in the Democrats' regaining control of Congress last November. This sense is not going away, because it's the result of trends over the last decade. Bernanke said nothing to the Senate on February 14 or to a House committee the next day to allay these concerns.

        In his response to President George W. Bush's January 23 State of the Union address, freshman Senator James Webb of Virginia actually put the health of the economy first before discussing problems with the war. Webb said that, "Wages and salaries for our workers are at all-time lows as a percentage of national wealth, even though the productivity of American workers is the highest in the world." He added, "In short, the middle class of this country, our historic backbone and our best hope for a strong society in the future, is losing its place at the table."

        While the economy grew 3.4% in 2006, the unemployment rate moved higher in January 2007, with manufacturing employment declining for the seventh straight month. The US household savings rate was negative again last year. What this means is that we are still in a "jobless recovery," with consumers taking on even more debt. According to economist Michael Hudson, the money that is sucked out of the economy when people pay interest on loans is being recycled by the banks for more loans, not invested in the producing economy. The debt pyramid is suffocating normal economic activity.
        .
        .
        .
        Something has to give. Even Paul Volcker has said the economy is on thin ice due to non-existent household savings. Warnings have come from the International Monetary Fund about the dire effects of the US housing crash. Some even speak of a worldwide recession or depression or of a "controlled" disintegration of national economies.

        We indeed may see epochal changes. We are at the end of the era of monetarism, where Federal Reserve monetary targeting was implemented by free market ideologues frustrated with the stagnation of New Deal and post-World War II central government planning strategies.

        The Keynesianism from those days and the monetarism that followed each lasted a full generation. But as noted earlier, the world has changed, especially with the rise of the huge Asian economies of China and India. We must now search for the principles and mechanisms that can work in a world no longer dominated by the Western victors of World War II, where domestic production is stagnant, and where financial bubbles distort measures of real value.

        So what is the next big idea that can truly make a difference, and will it serve or undermine political and economic democracy?

        Comment


        • #5
          Re: New Road to Serfdom

          Except that the FED hates wage inflation more than any other type.

          Besides, how could one cause wage inflation without inflating everything else? No one has the tools to do that - unless you propose legislating and regulating prices and wages, where the government tells employers they must raise wages, and tells homesellers they must not raise prices above their purchase price.

          Originally posted by grapejelly
          of course the outcome could be different from a crash.

          1. Virulent wage and goods price inflation

          2. Mortgage money remains relatively easy due to government and central bank intervention.


          3. Over about 4 or 5 years, wages raise the affordability to the extent that today's "inflated" prices are "reasonable" according to historically standard gauges of affordability.

          I don't really believe this, but I can see how it is a possibility.

          The fly in the ointment is, I think, real interest rates which today I think are negative. If they rise, that could mess things up in a big way. Dr. Hudson's presentation here was done a year or so ago and interest rates were rising. But as we can now see, they really haven't risen especially on the long end of things. It is possible that long rates will fall. So this "bailout through wage inflation" may come to pass, who knows?

          Comment


          • #6
            Re: New Road to Serfdom

            the relative payoffs to labor and capital have varied over time. we are currently at a peak for the payoff to capital, and a nadir in the payoff to labor. just regression to the mean would help wages. the argument against this is that labor is now subject to global arbitrage.

            Comment


            • #7
              Re: New Road to Serfdom

              Are we talking about the same thing?

              I thought the opposite is happening - bonds yields are extremely low.

              Capital invested in industrial ventures is also paying fairly low low ROI - hard to put up a new steel plant and charge any more than the next guy.

              Some capital invested in a few places may be paying high yields, but only because a low-yielding investment is so highly levered that, according to Archimedes, you could move the moon with it.


              Originally posted by jk
              the relative payoffs to labor and capital have varied over time. we are currently at a peak for the payoff to capital, and a nadir in the payoff to labor. just regression to the mean would help wages. the argument against this is that labor is now subject to global arbitrage.

              Comment


              • #8
                Re: New Road to Serfdom

                Debt can and does disappear through bankruptcy and right offs. According to the Bank of International Settlements, 75% of the world's liquidity is provided by derivatives. A collapse of CDOs and derivatives would quickly deflate the financial system. The coming housing collapse will be enough to destroy this liquidity.

                Comment


                • #9
                  Re: New Road to Serfdom

                  Originally posted by Spartacus
                  Are we talking about the same thing?

                  I thought the opposite is happening - bonds yields are extremely low.

                  Capital invested in industrial ventures is also paying fairly low low ROI - hard to put up a new steel plant and charge any more than the next guy.

                  Some capital invested in a few places may be paying high yields, but only because a low-yielding investment is so highly levered that, according to Archimedes, you could move the moon with it.
                  i was referring to record corporate profits. sorry for not being clearer.

                  Comment


                  • #10
                    Re: New Road to Serfdom

                    the only thing we can be sure is that we must avoid at this stage a rise in T bonds yields. in any case that would exacerbate the problem. so what can we do ? a) the Fed must change his language and promote the idea that inflation is over. otherwise when they will cut rates markets will anticipate a rise in inflation and bond yields will rise; b) the US adiministration must resist the temptation to reevalue the Yuan or the Yen; otherwise these heavy lenders to the US might reduce their invesments in T bonds (by fear of massive loss on their dollar assets ) which will make the yield rising c) find fiscal solutions to redirect capital flows to banks and bonds rather to private equity funds or stock market....
                    the US economy is a large debtor and cannot impose its solutions. only the lender can. good luck america !
                    miju

                    Comment


                    • #11
                      Re: New Road to Serfdom

                      Not a bad place to insert a priceless bit of a speech Greenspan gave on April 8, 2005. If anyone wonders if this guy had a clue where this would lead, this speech answers with a resounding "NO!". His timing for stepping down was impeccable however.

                      "A brief look back at the evolution of the consumer finance market reveals that the financial services industry has long been competitive, innovative, and resilient. Especially in the past decade, technological advances have resulted in increased efficiency and scale within the financial services industry. Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. Such developments are representative of the market responses that have driven the financial services industry throughout the history of our country.


                      "With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. The widespread adoption of these models has reduced the costs of evaluating the creditworthiness of borrowers, and in competitive markets cost reductions tend to be passed through to borrowers. Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s.


                      "As we reflect on the evolution of consumer credit in the United States, we must conclude that innovation and structural change in the financial services industry have been critical in providing expanded access to credit for the vast majority of consumers, including those of limited means. Without these forces, it would have been impossible for lower-income consumers to have the degree of access to credit markets that they now have. This fact underscores the importance of our roles as policymakers, researchers, bankers, and consumer advocates in fostering constructive innovation that is both responsive to market demand and beneficial to consumers."
                      Last edited by CanuckinTX; 02-21-07, 08:34 PM.

                      Comment


                      • #12
                        Re: New Road to Serfdom

                        Originally posted by CanuckinTX
                        Not a bad place to insert a priceless bit of a speech Greenspan gave on April 8, 2005. If anyone wonders if this guy had a clue where this would lead, this speech answers with a resounding "NO!". His timing for stepping down was impeccable however.
                        When things don't add up, check the premises.

                        Central bankers don't lie, or central bankers do lie.
                        Greenspan is really smart, or Greenspan is really dumb.

                        Actions speak louder than words. What were the words, and what was the action?
                        Last edited by Jim Nickerson; 01-12-08, 11:30 PM.
                        Jim 69 y/o

                        "...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)

                        Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.

                        Good judgement comes from experience; experience comes from bad judgement. Unknown.

                        Comment


                        • #13
                          Re: New Road to Serfdom

                          Originally posted by Jim Nickerson
                          When things don't add up, check the premisses.

                          Central bankers don't lie, or central bankers do lie.
                          Greenspan is really smart, or Greenspan is really dumb.

                          Actions speak louder than words. What were the words, and what was the action?
                          Well thanks to Eric we know that central bankers lie when not writing papers and suffering the indignity of explaining anything to anyone in Congress.

                          Was Easy Al so smart that he knew it was all bound to end badly and had his exit strategy lined up early on? Was he so naive that he couldn't see ahead to the trouble this would cause? Did he buy into the 'this time it's different' spiel of bankers who thought all of a sudden lending to people with bad credit wasn't such a bad thing because they had new 'models' to justify that these loans were winners, or could create instruments to diversify away the risk?

                          Personally, I don't want to give him any credit for being smart. I still remember his comments (maybe in 2003 or 2004) where he wondered why anyone wouldn't get an ARM loan given rates are so low. If he was anyone's financial advisor, that could be considered malpractice!

                          Comment


                          • #14
                            Re: New Road to Serfdom

                            Greenspan understood perfectly. He pursued his self-interest without concern of effect because that is the most moral thing one can do.

                            IMO, Greenspan may go down as a saint for singlehandedly accelerating the demise of the world central banking system. Assuming WE are smart enough to learn.

                            Comment


                            • #15
                              Re: New Road to Serfdom

                              Originally posted by fogger View Post
                              Greenspan understood perfectly. He pursued his self-interest without concern of effect because that is the most moral thing one can do.

                              IMO, Greenspan may go down as a saint for singlehandedly accelerating the demise of the world central banking system. Assuming WE are smart enough to learn.
                              that's like saying hitler was a saint for giving genocide a bad name.

                              Comment

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