Before we look back in time, be aware scammers have ingeniously come up with another con. Medicare is sending beneficiaries new cards. Crooks posing as Social Security Administration employees are placing calls to Medicare recipients asking to verify their Social Security number. No one from Social Security will ever call you. If someone from Social Security calls, hang up immediately.
In the newspaper business, a blank page is blasphemous; only twice have I seen anything close. It was a dark day when Lewis Grizzard posted an almost blank (syndicated, no less) column after Georgia lost to Georgia Tech. The New York Times recently had a full page listing the Wall Street CEOs who went to jail. Very little ink was on the page. More galling is not a soul lost their job unless they steered their company to bankruptcy.
Company executives aren’t the only ones at fault. To me, Alan Greenspan doesn’t get enough credit for his malfeasance. Greenspan's fingerprints were all over the Great Recession. Under his watch, interest rates remained too low for too long. While low rates buoyed housing markets, the going up was not worth the coming down. He forcefully argued a housing bust would not occur. Plus under the Home Owner Equity Protection Act of 1994, the Federal Reserve had authority to prohibit deceptive lending practices. By the time the Great Recession hit, only 1 percent of all mortgages had any restrictions under the Act.
Even more foolishly Greenspan kept an Ayn Randian, libertarian view of markets and regulation. He resisted calls for tighter regulations on exotic mortgages, which allowed people to buy homes otherwise unaffordable. Going back to the mid-1990s, he successfully argued against credit default swap oversight. As a result, the largely unrestrained business of spreading financial risk around accomplished as much but not like Greenspan envisioned. Ten years ago he testified to Congress, “This crisis turned out to be much broader than anything I could have imagined.” Greenspan’s Delphic comments regarding the economy ended up masking misguided financial notions.
Many factors led to the Great Recession. I don’t blame Greenspan for the entire debacle, but his foolish ideas cannot be understated. Under questioning by Representative Henry Waxman (D-CA), the Maestro admitted he “had found a flaw” in his ideology. Fortunately in October 2008, Georgia-born Ben Bernanke was chair of the Federal Reserve. Bernanke studied the Great Depression of the 1930s and used his insights to help avoid a looming catastrophe in 2008. While far from perfect, without Bernanke’s unconventional rescue programs and stimulus measures today’s economy would not be as robust. Criticize Bernanke if you like, but Greenspan’s core belief was banks were capable of protecting shareholders and equity in the firms. Taxpayers ended up the bill; so much for limited government.
Even though Buz Livingston is a fee-only certified financial planner this should not be considered personal advice. For specific recommendations visit online livingstonfinancial.net or at the office in Redfish Village, 2050 Scenic 30A, M-1 Unit 230.