Demographics and Einstein's Theory predicted the Collapse
Mort Zuckerman
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Subject: Demographics and Einstein's Theory predicted the Collapse
Date: Jan 5, 2010 8:20 AM
ARTICLE BELOW
================================
Um, the demographics in combination
with manufacturing jobs going south
(heating/energy costs) or else offshore
predicted that there would be no real
population to take over the inflated
housing.
Uuuum, educated white people, for instance,
generally moved out of the State of CT,
while the population increased only slightly,
that increase being due to an undereducated
um, demographic group.
No-Energy-America got involved in the Oil
Wars for reasons clearly stated by Junior
in the Gore Debates:
http://groups.google.com/group/sci.med.diseases.lyme/browse_frm/thread/e4359868117b8d81/e066f6566802741e?q=lehrer+bush+gore+bombs+bursting+in+air&rnum=1#e066f6566802741e
BUSH:
"It's also important to keep strong ties in the Middle East,
credible ties, because of the energy crisis we're now in. After
all, a lot of the energy is produced from the Middle East."
BUSH: Well, I think -- it's hard to tell. I think that, you
know, I would hope to be able to convince people I could
handle the Iraqi situation better. I mean, we don't...
LEHRER: Saddam Hussein, you mean?
BUSH: Yes.
LEHRER: You could get him out of there?
BUSH: I'd like to, of course. And I presume this
administration would as well. But we don't know. There's no
inspectors now in Iraq. The coalition that was in place isn't as
strong as it used to be.
=============
So, I am gonna guess that the Fed, being
synonymous with the CFR (and the Trilateral
Bilderbergs or the Bohomo-ian Grovers),
kinda sorta knows the Energy (power)
equation.
I watched this speech, myself. I was
sayin to myself, "How many other people
can see that Bernanke was tawkin the
same Kool-Aid as the MSM?"
"Does Bernanke know he's, to us, the
same as the Murdoch WSJ?"
He was half-blaming the people to whom
were sharked bogus mortgages and properties
when that would be the same Nouveau Noueveau
Riche group who 1) would not know the history
of BohomianGrover-nomics and who also
2) had false assurances from Greenspan, who
most certainly knew BohomianGrovernomics
as you say.
They, like usual, blame their own victims.
Yet they perpetually spew their own "we make
our own reality" Murdoch-isms to an audience
who's now got The Patch:
http://www.nicodermcq.com/
And who soonthereafter will be armed with
pitchforks. Or maybe a little underwear
thermate to give the devil his due:
http://www.actionlyme.org/070426.htm
KMDickson
http://www.actionlyme.org/index.htm
======================================
http://www.counterpunch.org/whitney01042010.html
January 4, 2010
Easy Money and the Housing Bubble
Bernanke in Atlanta
By MIKE WHITNEY
In an effort to defend himself against his critics, Fed chairman Ben
Bernanke spent over 2 hours at the Annual Meeting of the American
Economic Association in Atlanta trying to prove that low interest
rates were not the main cause of the housing bubble. Here's an excerpt
from Bernanke's speech:
"Some observers have assigned monetary policy a central role in
the crisis. Specifically, they claim that excessively easy monetary
policy by the Federal Reserve in the first half of the decade helped
cause a bubble in house prices in the United States, a bubble whose
inevitable collapse proved a major source of the financial and
economic stresses of the past two years....
With respect to the magnitude of house-price increases...
Economists who have investigated the issue have generally found that,
based on historical relationships, only a small portion of the
increase in house prices earlier this decade can be attributed to the
stance of U.S. monetary policy."
Bernanke is right in saying that the majority of economists now
believe that exotic mortgages and lax lending standards were the main
cause of the bubble. But that doesn't mean that the Fed's accomodative
monetary policy didn't play a big part, too. When the Fed lowers the
price of money below its inflation-adjusted value, it provides a
subsidy to borrowers. That leads to a flurry of speculation which
helps to rev up economic activity and lift the economy out of
recession. But there are unintended consequences to loose monetary
policy as well, like the emergence of gigantic asset bubbles. Whether
low interest rates were the "primary" cause of the housing bubble or
not is irrelevant. The point is, bubbles can always be contained by
raising rates and reducing the flow of credit. No one doubts that if
ex-Fed chair Alan Greenspan had raised rates by a full percentage
point in 2003, the frenzied spending in real estate would have slowed
dramatically.
Also, keep in mind, that Bernanke continued to deny the existence of
the housing bubble well into 2005, even though housing prices in many
areas of the country had more than doubled in less than 7 years.
Here's a clip from an article in the Economist (2005) with some of the
facts that were circulating at the time.
--"The total value of residential property in developed countries
rose by more than $30 trillion, to $70 trillion, over the past five
years – an increase equal to the combined GDPs of those nation...
--23 percent of all American houses bought last year were for
investment, not owner-occupation, showing that speculation in the real
estate market is rampant. CNBC reports that in Miami, a hotbed of
condominium building, an estimated 70% of condo buyers are investors/
speculators, and not residents.
--Due to various new forms of riskier mortgages, 42 percent of
first-time buyers – and 25 percent of all buyers – made no down
payment on their home purchase last year, the NAR disclosed, making
them especially vulnerable to a downturn in resale prices.
--In California, 60 percent of all new mortgages this year are
interest-only or negative-amortization. These loans are gambles that
prices will continue to rise."
Home prices were shooting through the roof, but neither Bernanke nor
Greenspan did a thing to dampen the spending-spree. Both men shirked
their regulatory duties and simply looked the other way while Wall
Street and the big banks raked in hundreds of billions of dollars on
the mortgage orgy.
Bernanke again: "For our part, the Federal Reserve has been working
hard to identify problems and to improve and strengthen our
supervisory policies and practices, and we have advocated substantial
legislative and regulatory reforms to address problems exposed by the
crisis."
Nonsense. Bernanke and his allies in congress have put the kibosh on
new regulations and made sure that securitization, off-balance sheet
operations, capital requirements, executive compensation and
derivatives-trading all stay the same. The Fed is a ferocious defender
of the status quo despite the obvious risks that present activities
pose for the economy.
Nothing has changed; Bernanke and Co. have made sure of that. The only
thing keeping the system upright, is explicit government backing; the
"full faith and credit" of the US Treasury. Without Uncle Sam's blank
check, the system would collapse tomorrow.
Bernanke again:
"With respect to the magnitude of house-price increases...At some
point, both lenders and borrowers became convinced that house prices
would only go up. Borrowers chose, and were extended, mortgages that
they could not be expected to service in the longer term. They were
provided these loans on the expectation that accumulating home equity
would soon allow refinancing into more sustainable mortgages."
Bernanke sounds like he just can't grasp why investors behaved so
irrationally. Could it be because Maestro Greenspan was using his
credibility to promote the various mortgage products? Here's a quote
from Greenspan before the bubble burst:
"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 the rapid growth in subprime mortgage lending…
fostering constructive innovation that is both responsive to market
demand and beneficial to consumers.”
Hurrah, for subprime, cries Greenspan.
And who was the champion of mortgage-backed securities, a market which
shrunk from $700 billion to $10 billion in the last year and a half?
Greenspan again:
“The development of a broad-based secondary market for mortgage
loans also greatly expanded consumer access to credit. By reducing the
risk of making long-term, fixed-rate loans and ensuring liquidity for
mortgage lenders, the secondary market helped stimulate widespread
competition in the mortgage business. The mortgage-backed security
helped create a national and even an international market for
mortgages, and market support for a wider variety of home mortgage
loan products became commonplace. This led to securitization of a
variety of other consumer loan products, such as auto and credit card
loans.”
And who was Wall Street's most enthusiastic pitchman for derivatives,
garbage loans, and the wide assortment of dodgy debt-instruments?
Greenspan again:
“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.”
Greenspan spearheaded the public relations campaign for Wall Street,
heaping praise on every leverage-enhancing innovation while turning a
blind-eye on regulation. He was supported throughout his tenure by his
right-hand man, Ben Bernanke. Both men are equally guilty.
True, low interest rates were not the main cause of the housing
bubble, but they did create a suitable environment for the bubble to
expand to catastrophic proportions and push the world economy into
deep recession. Greenspan and Bernanke did not cause the crisis, but
they were its enablers, which is even worse.
Mike Whitney lives in Washington state. He can be reached at
fergie...@msn.com
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