Controversies on the origins of the actual recession

The great asset bubble:

1. Central banks gold reserves - $0.845 tn.
2. M0 (paper money) - - $3.9 tn.
3. traditional (fractional reserve) banking assets - $39 tn.
4. shadow banking assets - $62 tn.
5. other assets - $290 tn.
6. Bail-out money (early 2009) - $1.9 tn.

On October 15, 2008, Anthony Faiola, Ellen Nakashima, and Jill Drew wrote a lengthy article in The Washington Post titled, "What Went Wrong".^[23] In their investigation, the authors claim that former Federal Reserve Board Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and SEC Chairman Arthur Levitt vehemently opposed any regulation of financial instruments known as derivatives. They further claim that Greenspan actively sought to undermine the office of the Commodity Futures Trading Commission, specifically under the leadership of Brooksley E. Born, when the Commission sought to initiate regulation of derivatives. Ultimately, it was the collapse of a specific kind of derivative, the mortgage-backed security, that triggered the economic crises of 2008.

While Greenspan's role as Chairman of the Federal Reserve has been widely discussed (the main point of controversy remains the lowering of Federal funds rate at only 1% for more than a year which, according to the Austrian School of economics, allowed huge amounts of "easy" credit-based money to be injected into the financial system and thus create an unsustainable economic boom),^[24][25] there is also the argument that Greenspan actions in the years 2002–2004 were actually motivated by the need to take the U.S. economy out of the early 2000s recession caused by the bursting of the dot-com bubble — although by doing so he did not help avert the crisis, but only postpone it.^[26][27]

References

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

Need an webmaster? Click HERE

Video: Michael Bloomberg - Origins of the Economic Crisis