I Pity Alan Greenspan

Alan Greenspan bears some of the responsibility for our economic disaster, and he knows it.

Today’s featured property is one of the biggest discounts I have seen to date on a high-end property.

22 Gray Dove kitchen

Asking Price: $900,000

Address: 22 Gray Dove, Irvine, CA 92618

White Dove — Scorpions

Waves, big like a house
Theyre stranded on a piece of wood
To leave it all behind
To start again

When Alan Greenspan stepped down as Federal Reserve Chairman in 2006, he was highly regarded by most experts and the wider general public as the man responsible for over 20 years of economic prosperity. Guided by his core beliefs in limited regulation and the wisdom of market participants to limit their own risk, he pursued policies during his tenure that have since proven to be disastrous.

If Alan Greenspan had died shortly after leaving office, he would have perished in ignorance of the problems he created. He would never have known the beating his professional reputation would take when the economic system he helped promote came crashing down. Ken Lay died before he could face justice, and his wife got to keep all the money. If Ken Lay had lived on, he would have faced nothing but suffering in his later years. Like Richard Nixon before him, Alan Greenspan will live on to wrestle with his failures, and also like Nixon, Greenspan will likely spend the rest of his life trying to convince a dubious public that his actions were justified and what he did was not wrong.

Alan Greenspan has publicly admitted to making some mistakes. His feeble defense of his actions usually center on the idea that the problems that brought down our financial system were too big for the FED chairman or anyone else to prevent. This is bullshit, and he knows it. The root of the problem is in the deeply held philosophical beliefs that he acted upon his entire career.

Alan Greenspan strongly believes the participants in the economy are aware of the risks they are taking on, and they are carefully managing those risks. In his world, government regulation to curb the excesses is an unnecessary hindrance to economic growth. Like Ronald Regan and the entire Conservative movement that he inspired, Alan Greenspan believed that government is not the solution, it is the problem.

The failures of Alan Greenspan and those who failed to regulate our financial markets have lead to the economic catastrophe we are facing. Everything Alan Greenspan believed his entire career was wrong. He knows that now; although, he will likely spend the rest of his life trying to deny it. He will live out his life in disgrace partly responsible for the suffering of millions of people around the globe.

I don’t feel sad for him. I chose the word “pity” carefully. To feel sadness for someone’s actions, you must feel compassion for their plight. Pity masquerades as compassion, but there is a lack of empathy in the emotion of pity–A lack of empathy often caused by the fact that certain tragedies are self-inflicted. The attitudes, beliefs and actions of Alan Greenspan caused his own downfall. I do not feel sad for him; I pity him.

For more information, please read Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve

22 Gray Dove kitchen

Asking Price: $900,000IrvineRenter

Income Requirement: $225,000

Downpayment Needed: $180,000

Monthly Equity Burn: $7,500

Purchase Price: $1,485,500

Purchase Date: 12/13/2006

Address: 22 Gray Dove, Irvine, CA 92618

Beds: 4
Baths: 5
Sq. Ft.: 3,400
$/Sq. Ft.: $265
Lot Size: 7,362

Sq. Ft.

Property Type: Single Family Residence
Style: Contemporary
Year Built: 2006
Stories: 2
View: Hills
Area: Portola Springs
County: Orange
MLS#: S566502
Source: SoCalMLS
Status: Active
On Redfin: 1 day

New Listing (24 hours)

Gourmet Kitchen Award

Highly upgraded largest floor plan of Las Colinas. Private cul-de-sac
location with view from 2nd story. Extra large lot in the
neighborhood.Three bedrooms with own baths, plus huge bonus room and a
casita with its own bath. Rich hardwood, stone and plush carpeting
throughout.Gourmet kitchen with top of line appliances, granite counter
and designer tile back splash and built-in regrigerator. Large walk-in
pantry. Center island with sink and wine cooler. Nice size breakfast
nook with french door to backyard. Custom beamed ceilings in great room
and master bedroom. Upgraded tiles on bath tubs and shower stalls.
Custom window treatments including plantation shutters. Better than
model and deal of the century.

Better than
model and deal of the century? Realtors can’t resist nonsense, can they? This was a decent description until they had to slip in some cheezy realtorese right at the end.

regrigerator?

This was a flip–a dumb flip. The owner paid $1,485,500 on 12/13/2006. He used an Option ARM for $1,188,280 and a $297,220 downpayment. Now, he is going to lose his downpayment and ruin his credit.

If this property sells for its asking price, and if a 6% commission is paid, the total loss on the property will be $639,500.

This property is being offered for 40% off its peak purchase price.

{book4}

Waves, big like a house
Theyre stranded on a piece of wood
To leave it all behind
To start again

And now your telling me
Youve seen it all before
I know thats right but still
It breaks my heart

Well, the golden lamb we sent
Makes us feel better now
But you know its just a drop
In a sea of tears

White dove
Fly with the wind
Take our hope under your wings
For the world to know
That hope will not die
Where the children cry

White Dove — Scorpions

70 thoughts on “I Pity Alan Greenspan

  1. Lee in Irvine

    Alan Greenspan was a very good friend to Ayn Rand, the novelist, philosopher and mother of the objectivism movement. This is the woman who planted the seeds in Greenspan’s brain many decades ago … “self governing free markets”. He rode this ideology all the way to the end, ultimately destroying his once stellar reputation, and taking America’s economy down with it. Yes … Alan Greenspan is the most responsible person for bubble america and this debacle.

    What have we learned … capitalism without some sensible regulation is a self fulfilling time-bomb. Especially when Wall Street pays the credit agencies to stamp AAA on junk paper. Then we hedge all the slimy paper with a speculative product called a credit default swap. And all this was done so we could give americans what they wanted … free money!

    1. Perspective

      Anyone who’s a slave to a certain dogma, to the exclusion of all other alternatives, will find failure.

    2. carenter

      I beg to differ. Free markets do work and create prosperity to the society as a whole. However what we had in financial sector was not free market. We however had free market in non-financial sector. That is why you tend to see higher prices for financial assets (stocks, real estate etc), and you see quite cheap prices for industrial products. Why is not free market?
      1 – Currency backed by nothing
      2 – CRR of 10% for banks that allows leveraging up to 10 times.
      3 – Allowing banks & FIs to hide loans without being subject to CRR limit.
      4 – Artificial setting of interest rates by Federal Reserve as if it knows what the interest rates should be.
      5 – Rating agencies paid by issuers and not purchasers.

      1. Lee in Irvine

        You only think you differ with me. I am also a believer in free market capitalism. But now, because we had a bunch of nonpragmatic, ideologues in charge, we are facing government control over our entire finance industry.

      2. IrvineRenter

        For the last 20 years, I was as misguided as Greenspan. Unlike many dogmatists, I am willing to change my mind if the data says so. Right now, the data shows deregulation was a mistake and totally unregulated markets are prone to many forms of corruption and frequent financial bubbles and Ponzi Schemes. Free market capitalism is not bad, and it is not dead, but it requires regulation to prevent catastrophes like we are seeing today. I just hope the Congress comes up with the right regulations. I have my doubts.

        1. nowwaat

          Agree! Regulation means there are rules! Would you play a sports game without any rules or referee? Can you imagine what would happen? Even Rugby and Boxing have rules.

      3. jim Slavin

        I agree totally.. the markets aren’t FREE when the moral hazard is created by allowing banks to sell all their paper to a Gov’t agency who freely stamps AAA on every loan… If banks weren’t allowed this, they wouldn’t have given away FREE Money.. I like what Peter Schiff says,
        If you give a classroom of children a pile of candy and leave the room, don’t be suprised and hour later when they are bouncing off the walls…
        You see, it was the FED who created this all along, with the help of the Gov’t.. and now they have the SOLUTION ? oh no !!

    3. mikey

      I beg to differ….Greenspan WAS a strong follower of Ayn Rand’s philosophies. He later changed his beliefs and followed a different course.

      Example…read some of his early papers on his disagreement of the creation and policies of a federal reserve and its ill effects on the free market and how it should be abolished. Of course once he rises though the system to become Fed Chairman he suddenly decides that its a worthy institution and so worthy is it that he uses his power to spread its wrath and further destroy the economy.

    4. just lazy

      The great assumption with all of this is the possibility of loss of money, will make people do the research for where they spend and invest their money. We all know what assumptions do. The majority of people are lazy and want it for free. Even people that are paid to do the research are too lazy to do it (banker, fund manager, ect.). To protect our selves from our selves is why we need regulation.

      1. darms

        I for one did this research as to where I spent & invested my money which is why the bulk of it is & has been in CDs at local credit unions for some time (& why I haven’t lost any in the last 18 months, either). The ‘summer of Enron’ cured me of the stock market, probably forever, and as for real estate, the prices my neighbors were asking were absurd, and that’s here in Austin, TX! I cannot imagine what you in CA & FL were seeing though I’ve been reading about it here for sometime. Thanx for a fascinating blog IR.

      2. maliburenter

        Most people either imitate, look for some sort of default investments, or hire others for advice.

        Unfortunately, that advice has often been quite bad.

    5. Jeff

      The Federal Reserve represents the antithesis of the free market, i.e. centralized planning of the money supply and interest rates. In a true free market, interest rates would be determined by savings rates. The more people saved, the more banks would have to lend, hence lower interest rates. What the Fed has done (really since the 1970s) is set the cost of borrowing money artificially low, below what the free market would warrant. When the cost of money is artificially cheap, both businesses and individuals make bad decisions. They borrow and expand too much. The commercial banks also lent money foolishly, without proper regard to credit risks.
      Also, the Fed increased the supply of dollars (both paper and electronic) enormously in the last two decades. With rapidly increasing money and credit deployed, buyers chased the cost of housing to artificial levels.
      The very existence of the Fed is anti-market. The Fed reprsesents collectivist centralized planning of the economy, like the Soviet Union of the Communist era. Just as Soviet planners could not properly determine wages, prices, and supplies of goods (only market signals can do this), Fed planners cannot determine the proper supply of money or the proper interest rate.
      The U.S. economy consists of millions or perhaps billions of individual transactions every day. The idea that the Fed (or Congress, or the President, or anyone else) can “manage” or “run” the economy is absurd and very dangerous.
      With apologies, anyone who thinks Fed policies of the last 20 years represent unbridled, free-market capitalism is misguided.

      1. IrvineRenter

        You are right, the last 20 years represents the worst of both worlds. We had a manipulated market with no rules. We did have unbridled, free-market capitalism. We witnessed all of the problems of an unregulated market pumped up on steroids by the manipulation of the FED.

        Many propose abolishing the FED. This may or may not be a good idea. I really don’t have much of an opinion because it is never going to happen. Most people who propose getting rid of the FED believe that this will solve all our problems. In their world, market deregulation was not the problem, the problem was that this deregulation did not go far enough. They may be right, but it is very unlikely that we will ever find out because the FED is not going to be abolished, even if it should be.

      2. nowwaat

        I think the original role of the Fed Reserve was to fine-tune the economy and soften the effects of the business cycles on employment (i.e. so-called “soft landing”) in the “bad times”, and to control inflation during “prosperous times”. Needless to say, the Fed did this by setting interest rates which the independent banks usually followed. Not completely free, I agree! But even if there was no Fed Reserve, would the market really be free? Free from manipulators and financiers? Recall the profiteers of the rail road project of the 1,800’s? Now, the Fed (and FDIC) diverging from this role is another story.

        1. awgee

          The original and current role of the Federal Reserve is to consolidate control, power, and wealth in the hands of a few already powerful bankers.

          1. DeathToSinan

            Yes it is. Did you read “The Creature from Jekyll Island”? If the Fed was such a great idea, then why would it be run only by bankers? Short of revolution, I doubt it will ever be abolished.

    6. awgee

      As long as a central bank can manipulate interest rates and create money from nothing, there is no free market. Free market capitalism did not cause the current propblems and Greenspan was not true to Rand ideology.

      1. Lee in Irvine

        Why does everyone want to challenge me and my statement that Greenspan was a student of Ayn Rand. He most certainly was! He led the charge in securitization, the repeal of the glass steagall act, and was a staunch supporter of deregulation.

        He was an uncompromising ideologue just like Ms. Rand.

        “Ayn Rand and I remained close until she died in 1982, and I’m grateful for the influence she had on my life. I was intellectually limited until I met her. All of my work had been empirical and numbers-based, never values-oriented. I was a talented technician, but that was all. My logical positivism had discounted history and literature — if you’d asked me whether Chaucer was worth reading, I’d have said, “Don’t bother.” Rand persuaded me to look at human beings, their values, how they work, what they do and why they do it, and how they think and why they think. This broadened my horizons far beyond the models of economics I’d learned. I began to study how societies form and how cultures behave, and to realize that economics and forecasting depend on such knowledge — different cultures grow and create material wealth in profoundly different ways. All of this started for me with Ayn Rand. She introduced me to a vast realm from which I’d shut myself off.” ~ Alan Greenspan, The Age of Turbulence, pp. 51-53

        1. DeathToSinan

          That explains why Greenspan f***ed up so royally.

          “Rand persuaded me to look at human beings, their values, how they work, what they do and why they do it, and how they think and why they think. This broadened my horizons far beyond the models of economics I’d learned.”

          Did he assess correctly human beings and their values, how they work, what they do, and why they do it? How fitting that he used our economy as a glorified social experiment.

    7. sonnambula

      What regulation do you suggest can actually work in the real world? Every regulatory agency can be bought off, bribed, or–if run by the government–filled with incompetent government workers. I really have a dim view of any possible semblance of regulation.

  2. Texas Triffid Ranch

    The author Harlan Ellison is fond of bringing up a particularly succinct quote: “If you make them think they’re thinking, they’ll love you. If you really make them think, they’ll hate you.” Greenspan did so well because he told so many greedy idiots exactly what they wanted to hear about deregulation, and not one of them wanted to hear that the place you want to be in a pyramid scheme is at the top, not at the bottom. I don’t feel any pity for Greenspan, because he willingly let everyone else jam their fingers in his ears so he couldn’t hear the truth, and thanked them for it afterwards.

    1. nowwaat

      Soon after leaving office, Greenspan was bragging on how he used to skirt questions with oblique words or sentences which made him sound as if he was answering the questions at Congressional hearings but he really was not. He admitted as much. I guess even Greenspan needs to brag now and then.

  3. ozymandias

    I just wish, that if we were going to follow the Greenspan advice and march to the Greenspan drummer, which we did, by allowing the modern day “bucketshops” (which incidentally, was done in the Clinton administration, according to 60 Minutes), that we would go all the way and let the chips fall where they may, a la the “free market” and not this huge bailout that will linger as a drain on the american people long after the AIGs of the world have moved on.

    i think the bailouts will drag the recession out longer instead of shortening it. just my two cents.

    1. Major Schadenfreude

      “I just wish, that if we were going to follow the Greenspan advice and march to the Greenspan drummer, which we did, by allowing the modern day “bucketshops” (which incidentally, was done in the Clinton administration, according to 60 Minutes), that we would go all the way and let the chips fall where they may, a la the “free market” and not this huge bailout that will linger as a drain on the american people long after the AIGs of the world have moved on.”

      Amen to that!

      If people want to lend to deadbeats, let them. When the deadbeats don’t pay, the lender is suppose to then (re)learn that they should not lend to such. We have to allow this educational process to occur, so it doesn’t reoccur!

    1. Anonymous

      I read Greenspan’s book, it’s full of stuff that doesn’t make sense, like saying concerns that debts have outstripped people’s incomes are fine, because they have assets to match the debts.

      Even now, he doesn’t get it.

      The Fed Didn’t Cause the Housing Bubble
      Mar 11, 2009 by Alan Greenspan
      http://online.wsj.com/article/SB123672965066989281.html

      “However, the interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages.”

      Hello – they are related you know. When investors get minimal returns in stuff tied to the short term rate, they get desperate for yield … who do you thing bought those long-term mortages? Also, I guess those with unconventional mortgages didn’t count right? Good grief.

      1. Anonymous

        Also, Greenspan helped push the financial deregulation that got us into this mess, and acted to squash others who sounded the alarm on poor housing loan practices and so on.

        http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

        So not much pity here. Greenspan, by his own admission in the book 1. lived though the Great Depression so he ought to have know better and 2. is simply a number cruncher who doesn’t even try to predict based on theory – he just looks at past patterns and crunches numbers to extrapolate, kind a like human computer.

        America deserved a better Fed chairman that a guy who just says “the ball is rolling at x speed in direction y, so I predict in 5 secons the ball will keep rolling at x speed in direction y” without bother to look up to see if there is a wall in the way. It’s ridiculous.

      2. nowwaat

        I almost lost half of my emergency cash this way. In 2005, employees of my “independent broker” told me you can get 4% to 5% by buying into a “mutual fund that buys ultra-short bonds that is as safe as money market”. I got lucky on this one by selling the mutual fund in 2007 soon after reading an article on MSN. In 2008, immediately after Bear Stearns’ fiasco, the mutual fund dropped 30% (now down 50%)! Guess what? Directly or indirectly, the fund was buying into mortgage-backed securities! 50% drop for a fund that I was told it’s as safe as a money market funds! I still recall the days when my checking account was paying 4.5%!

      1. no_vaseline

        [img]http://www.myspaceandtime.com/wp-content/uploads/2008/04/thumb463x_mrt-vader.jpg[/img]

        1. mav

          LULZ-galore…. great LULZ were had by all….
          no-vas i’m still laughing a minute after the golden darth vader mr. t popped up

  4. nowwaat

    To deal with the last recession of 2001, Greenspan said let’s have a party… a party that lasted 7 years, when 30 year mortgage rates dropped from 7.5% to as low as 5% at times. However, the benefits of the low interesr rates were soon way outweighed by the draw-back of high home prices which created the housing ATM many borrowers were using. I suppose Bill Flenckenstein was warning about the last few years.

  5. socalhousingbubble

    If the owner is lucky, TIC will come in and buy the property close to the original purchase price to prop up home values in Irvine.

    1. Carol

      Irvine Company will never do this. This is not the old TIC you known of. Just see how crowded the school in the new community. TIC does not honor the city anymore. It is a totally profit driven company. This is Wall St era. Greed is good, Greed is right.

      Irvine Company will have a few better methods to profit:

      a. If the prices fail, they will use the cash to buy more land.
      b. change zone and make higher density housing (Since Irvine city members will ALWAYS agree).
      c. Build more apartments with 4/5 story
      d. Build more high rises.
      e. Donate more $ to politician.

  6. newbie2008

    On free market doesn’t mean no govt involvement. Govt are need to regulate contracts, vocabulary and ratings. You can’t have a free market when you buy a AAA rated bond that’s the worse than junk bond. Have an contract to build a 3020 sf house that’s really 2750 sf. It all boils down to the defense what you define “is” is and if you have friends in high places. That defense needs to be wholely rejected to stablize trust in the market. What if you agree to work for $7000 per month and after a month they only pay $3000 or pay in Confederate money? Sell a house for $600,000 and then only get $400,000 because the buyer’s defination on $600,000 is $400,000 is close enough. We need a reality check in regulating business, govt., etc.

    1. IrvineRenter

      The government regulation of contracts did not prevent the derivatives industry from creating a behemoth of credit default swaps which is largely responsible for the illusion of risk protection that in turn created a Ponzi Scheme of debt structures. You miss the point if you believe that only regulation of contracts is necessary and that regulation of the contents of those contracts is not.

      1. awgee

        Fractional Reserve banking is responsible for both the shadow banking system and the proliferation of credit default swaps, interest rate swaps. Fractional reserve banking is the result of bad government regulation.

        1. djd

          Fractional reserve banking is the result of bad government regulation.

          I keep hearing that sentiment. I do not think it means what you think it means. (Or rather, what I think you think it means.)

          Fractional reserve banking follows naturally from the existence of banking as commonly defined. Any depository making loans will have fractional reserves. Removing fractional reserve banking requires prohibiting loanmaking by depositories.

          I see the depository problem as rooted in the mismatch between the extreme safety demanded for deposits and the absence of any risk-free return in the real world. I argue that it is philosophically better to separate investment and savings than to conflate them through depository lending and interest paid on savings. And I fully expect that if this separation is ever carried out, it will still not prevent financial bubbles and subsequent crashes due to mismatch between perceived and actual risk.

      2. newbie2008

        The govt both state and federal failed in their regulatory role of insurance. Credit default swaps are insurance renamed as credit default swaps to avoid state and federal insurance regulation.
        I’m not saying all regulation is bad or should be confinded to contract law. Enforcing regulation through the courts are a fool’s game for the individual — Too expensive and questional outcome. Without govt regulation, no one would trust the bank and the banks can almost create unlimited money supply expansion by having no to little reserves. This would lead to hyperinflation in one area (e.g. housing) followed by a collapse in credit and the economy (housing bubble crash). It’s a repeat of the credit expansion for buying stocks on the margin at 10%, then the credit begining called or withdrawn and then the great depression. Margins are set at 50% today.

        There’s really no question that the Fed had a major role in the bubble. The people in the Fed are not stupid. The questions are why and for whom?

  7. movingaround

    I just don’t see how Irvine can support all these larger 3000 sq ft ‘million’ dollar homes. I mean this is in Portola Springs – not even considered one of the ‘top’ neighborhoods of Irvine. Only approximately 5% of the population of the US makes over 150,000 dollars – do they all live in Irvine???? I don’t think so!

  8. Chandler Real Estate

    I agree with respect to Greenspan. The problem is that his freemarkets ideology was too extreme. He believed that markets and shareholders would drive companies to act in the best interest of those shareholders no matter what the circumstance.

    However, the markets also have to be protected from the very desires of those shareholders when those desires push a company’s leadership to look for fast, high yield gains at the expense of longer term strategic and sustainable growth.

  9. camsavem

    This thread is funny.
    Does anyone really expect anyone in government to do anything right? If you think it’s bad now, just wait until politicians get done “fixing” everything that is wrong.

    Whenever government gets involved it goes from bad to worse, to ridiculous, to un workable.

    Basic rules and laws need to be put into place but other then that, stay out of my business. If dumbassess buy a house they cant afford and it gets foreclosed, bummer. If the banks were stupid enough to make that same mistake so many times that they get foreclosed on, bummer.

    There is a place for risk takers, it’s what America was built on. But if the risk fails, then those that failed need to suffer the consequences.

    Greenspan was a self indulged idiot because he is not aware of this simple fact…..

    Most truly wealthy people are wealthy because they care more about money and privelage than they do about people. Given the chance to make themselves wealthy or to better the lives of their salaried employees, executives have proven that they will take the multi-million dollar bonus and let go the working single mothers and other wage earners.

    1. MikeyD

      re: Most truly wealthy people are wealthy because they care more about money and privelage than they do about people. Given the chance to make themselves wealthy or to better the lives of their salaried employees, executives have proven that they will take the multi-million dollar bonus and let go the working single mothers and other wage earners.

      You have a link to some hard data to back this up or was it pulled from your arse?

      1. DeathToSinan

        OMG–have you ever read any company’s financial statements?

        The very FEW truly wealthy people who care about people are listed in the “Forbes 100 best places to work”. The rest–the majority–are greedy, exploitive bastards, who would legalize slavery again if they could pay enough politicians to do it.

        Re: “Given the chance to make themselves wealthy or to better the lives of their salaried employees, executives have proven that they will take the multi-million dollar bonus and let go the working single mothers and other wage earners”

        I’ve seen it year in and year out! You can’t claim this doesn’t happen when I’ve seen it repeatedly throughout all my working years.

      2. ignorantoutsider.

        OK so you swallowed the Rush Limbaugh Koolaid about trickle down economics. All those peasants need is for the landlord to be richer and more powerful and he will just be sooo nice! Check out how this worked out for the Irish in the potato famine. Some of us ended up over here to avoid the inevitable consequences of the philosophy of George the IIIs English aristocracy. NO Mikey the sainted Ronald Reagan didnt reinvent human nature. The average rich will screw anyone anytime anywhere for an extra buck, and enjoy knowing they are better people because they are richer.

  10. lendingmaestro

    I am amazed. Huge discount and it is STILL almost a MILLION dollars!? WTF do these people do for a living. Seriously?

    300k a year of sustainable, consistent income still puts this house at 3x annual income.

  11. tonyE

    I toured these models a while back and was appalled at how much wasted floor space there is.

    These homes do not feel like 3400 sq feet, they fell more like 2400.

    Stereotypical McMansion that will not sell very well going forward. Who wants to heat and cool all those wasted nooks and cranies?

    Soon, we’ll look at the “Italianate Style” just like we look at the “Mediterranean Style” in Westpark… DATED.

    The next style, in response to today’s market, will be the SMALL BUNKER. 1200 sq foot, no AC, no heat, a water well, concrete floors, two big rooms with sleeping cots on the corners for 12 people, two indoor latrines, a woodburning fire, 2 feet wide walls, corrugated metal covers on a few portholes and machine gun turrets on the four corners.

    1. IrvineRenter

      I do not know for sure, but when I see an Option ARM for well over $1M, it doesn’t look like a long-term homeowner seeking stable loan terms.

  12. emilie

    I still haven’t been able to figure out where all the people are that can afford to buy a 900K home in Irvine. I wouldn’t think there were that many two-income professional households around. Unless, of course, you consider the mortgage brokers and realtors of yesteryear.

  13. Hormiguero

    How can you guys mix up pre and post senility greenspan?

    Anyhow, this location sucks. the fact that anyone paid well over a million to suck fumes from the 133/241 interchange is sad and pathetic. the same goes with million+ places looking over freeways in brentwood, studio city, etc. blech.

  14. awgee

    “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford

    The Congress shall have Power to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures Article 1, Section 8 – US Constitution

    “All the perplexities, confusion and distress in America rise, not from defects in the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.” – John Adams in a letter to Thomas Jefferson

    “I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.” – Thomas Jefferson

    [The] Bank of the United States… is one of the most deadly hostility existing, against the principles and form of our Constitution… An institution like this, penetrating by its branches every part of the Union, acting by command and in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or its regular functionaries. What an obstruction could not this bank of the United States, with all its branch banks, be in time of war! It might dictate to us the peace we should accept, or withdraw its aids. Ought we then to give further growth to an institution so powerful, so hostile?” – Thomas Jefferson

  15. awgee

    “History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance” – James Madison

    “If Congress has the right to issue paper money, it was given to them to be used … and not to be delegated to individuals or corporations” – President Andrew Jackson, Vetoed Bank Bill of 1836

    “Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the grace of the Eternal God, will rout you out.” – Andrew Jackson

    And in case you are still not convinced that you need to learn exactly what money is and is not:

    “Those few who can understand the system (check book money and credit) will either be so interested in its profits, or so dependent on it favors, that there will be little opposition from that class, while on the other hand, the great body of people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear it burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” – Rothschild’s Bros. of London

  16. awgee

    “Throughout my public life I have supported all measures designed to take the Government out of the banking business. This bill puts the Government into the banking business as never before in our history. The powers vested in the Federal Reserve Board seen to me highly dangerous especially where there is political control of the Board. I should be sorry to hold stock in a bank subject to such dominations. The bill as it stands seems to me to open the way to a vast inflation of the currency. I had hoped to support this bill, but I cannot vote for it cause it seems to me to contain features and to rest upon principles in the highest degree menacing to our prosperity, to stability in business, and to the general welfare of the people of the United States.” – Senator Henry Cabot Lodge – Dec 17, 1913

    “Should government refrain from regulation (taxation), the worthlessness of the money become apparent and the fraud can no longer be concealed. By this means government may secretly and unobserved, confiscate the wealth of the people and not one man in a million will detect the theft.” – John Maynard Keynes

    “Mr. Chairman, we have in this Country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the Nation’s debt. The depredations and iniquities of the Fed have cost enough money to pay the National debt several times over. This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Fed and through the corrupt practices of the moneyed vultures who control it.”
    – Louis T. McFadden – Representative from PA 1934

  17. awgee

    “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” – Alan Greenspan – 1966

    The last one is for any of you who think that Alan Greenspan was true to his objectivist ideology during his tenure as Fed Chairman.

    The American voter is getting EXACTLY what he/she has voted for.

      1. awgee

        You are welcome. And I am just compensating for not having any original thoughts of my own.

  18. LC

    It’s time you walked away
    set me free
    I must move away
    leave you be…
    time’s been good to us, my friend
    wait and see how it will end
    we come and go as we please…
    we come and go as we please…
    that’s how it must be

    Here in crystal chandelier, I’m home
    too many days, I’ve left unstoned
    if you don’t mind happiness
    purple-pleasure fields in the Sun
    ah, don’t you know I’m runnin’ home…
    don’t you know I’m runnin’ home…
    to a place to you unknown?

    I take great peace in your sitting there
    searching for myself, I find a place there
    I see the people of the world
    where they are and what they could be…

    I can but dance behind your smile…
    I can but dance behind your smile…

    you were the world to me for a while

  19. tazman

    Irvine Renter:

    I have to disagree with you that markets don’t work without sensible regulation. The banking and finance industry is and was one of the most highly regulated industries in the United States. What got us into this mess was not a blind faith in free markets, but some of the most egregious government intervention in the markets. Namely, the government’s push to turn everyone into a “homeowner” regardless of their demonstrated ability to afford or pay for their property. The other piece of the equation, the one Greenspan is definitely on the hook for, is that the government, via the Fed, uses “top-down” communist style price setting–not a FREE market–in interest rates. This is what really distorted the market in lending. Whenever you distort the market by setting prices too low, everyone rushes in to buy the product. Money is no different than any other commodity. If you arbitrarily set the price of money too low, you will have more people demanding it…econ 101. Think about if you had a story selling Wiis for $10 last Christmas. Do you think they would have a line around the block? Of course they would! So no, I can’t agree with your analysis that it was the “free” market that caused this mess… it was the government’s price setting cartel (er, Fed) that caused the distortion in the market.

  20. tlc8386

    In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

    The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) — giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses — most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

    In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain’s economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of “megamergers” took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm’s Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm’s Act: an experiment in deregulation.

    Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision — lobbied for by Enron, a major campaign contributor to Gramm — that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm’s wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

    In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm’s tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the “Loan Shark Protection Act” by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, “[showing] signs of softening,” but said that a “sharp slowdown,” is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, “In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in ‘other assets’ primarily related to CDOs,” (Mother Jones, August, 2008). With such self-interest, and a lack of the nation’s interest, we can see how this subprime mess was allowed to escalate to such great proportions.

    Some justice was served, however, this spring, as UBS became one of the subprime debacle’s biggest losers, having to write down $37 billion — the same amount as their previous four years of profits combined. UBS also made the public aware that two-thirds of its losses were due to reckless investing in collateralized debt obligations (CDOs).

  21. Failedagent

    awgee- thanks for the great quotes. The current crisis is obviously nothing new….

    tlc8386- the repeal of the Glass-Steagall act was THE big mistake leading to the current crisis. It essentially allowed private risk investment banks to jeopardize FDIC insured consumer banks and demand that the Fed step in to cover the losses.

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