by
Charlie Champion
The progression of small bailouts culminated with the stock market . Com meltdown
in the Spring of 2000.
To ease the pain of the Market collapse,and the subsuquent 9 11 disaster, interest rates were
dropped too low (1%) and held there or too long. This low cost, plentiful money, led to the housing
boom in the United States. This boom quickly grew into an enormous bubble, fueling a World Wide
expansion. The Housing Bubble here has become a Global bubble of credit , liquidity, and
massively undercollateralized monetary lending vehicles, and funding institutions.
This has been a grave and irresponsible miscalculation of the effects of prolonged low interest
rates and easy money , when used as a method of controling the economic cycle..
Easy , cheap credit, was nourished by the deregulation of the banking industry. The lowered
lending standards and collateral requirements,championed by Alan Greenspan and the Federal
Reserve encouraged excessive speculation in construction and residential real estate.
What had been a major good policy in its inception, has rolled into larger and larger bailouts.
We are paying the price, now, but the worst is still to come.The Freddy and Fanny bail outs,
and the Wall Street open invitation to feed at the trough/Fed, bodes ill for the future in terms of
inflation and liquidity.