Guest Post: Greenspan Says Worst Financial Crisis EVER, INCLUDING the Great Depression

Greenspan just said that the current credit crunch is “by far the greatest financial crisis, globally, ever” — including the 1930s Great Depression.

Bloomberg notes:

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.”

Greenspan also said “fiscal affairs are threatening this outlook” for recovery.

As I pointed out last May:

The following experts have said that the economic crisis could be worse than the Great Depression:

Unfortunately, virtually everything the American government has done since the crisis started has been counterproductive. See this, this, this, this, this, this, this, this, this, this and this.

The same is true of most other governments.

In the understatement of the day, Greenspan also called the recovery “extremely unbalanced,” driven largely by high earners benefiting from recovering stock markets and large corporations.

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George Washington is the head writer at Washington’s Blog. A busy professional and former adjunct professor, George’s insatiable curiousity causes him to write on a wide variety of topics, including economics, finance, the environment and politics. For further details, ask Keith Alexander…


  1. scraping_by

    “Greenspan did see signs pointing toward a modest recovery in job creation, saying that staffing levels at U.S. firms, which were deeply cut, remain below what is sustainable in the long run.”

    This is classic Greenspan doublespeak. After noting there’s no activity in the economy, he goes on to talk about what firms need to do to service economic activity. Demand as manna, falling from Heaven to feed the chosen nation. Ignoring the possibility the long run may be downhill all the way.

    Since all the empty suits were taught in business school to outsource first and ask questions later, much of the shrinking workforce is due to offshoring jobs and processes. Little of the money sent away returns, further cutting demand, but that’s not the problem of the suits. It falls from Heaven.

    I noted Old Al was talking to a group from credit unions. Does he say the same things speaking, say, to a banquet for derivative traders?

    1. jumping jim

      You got it scraping by. I work in engineering, and it’s all about how to send it somewhere else to make a buck now.

      The problem with the outsourcing, that many suits don’t realize, is it makes it more difficult to innovate the next generation when the equipment is on the other side of the earth. I can’t fly back and forth to taiwan to troubleshoot equipment or get a good idea from somebody I mountain bike with. They speak a different language and might ride a donkey. Kind of an akward way to innovate and improve when everything has been given away for the quick buck.

  2. MyLessThanPrimeBeef

    People couldn’t decipher Greenspan for years when being able to do so would have saved the world from the mess we are in. But now, with the damage already done, he seems pretty easy to understand. I guess that’s tough break for the world.

    By the way, speaking of the Great Depression, I always believe the proper term for the state of the economy, any time, is, and you can call me a pessimist, pre-depression.

    I also think the proper term for ‘boom’ is ‘pre-bust.’

    And the proper term for ‘meal’ is ‘pre-trip-to-the-toilet,’ as in, I am so hungry for a pre-trip-to-the-toilet.

    And the proper term for ‘living’ is ‘pre-dying.’

    Have a great day, or maybe, have a pre-bad day!

  3. SP

    “extremely unbalanced”!

    That right there is one of THE fundamental problems with all the macroeconomists’ recession-fighting prescriptions. Drop interest rates, increase fiscal spending, raise confidence. Lather, rinse, & repeat. The economy ain’t shampoo!

    Where do you see any macroeconomic theory discussing “balanced” growth? You don’t. They just worship one number: GDP. And then Greenspan wonders why in the world the “recovery” is unbalanced? He can’t see past his own nose that all the economic interventions just twist the structure of our economy further and further–sowing the seeds for the next big crisis….. Sheer madness!

  4. MyLessThanPrimeBeef

    What about Warren Buffett? Does he think it’s also worse than the Great Depression? Maybe Munger does.

  5. Doug Terpstra

    Greenspan in October 2008: “I found a [royal] flaw…in the model that I perceived is the critical functioning structure that defines how the world works.”

    “Short term credit” limitations don’t begin to describe the current mess. How about this Alan, …”the recent financial crisis was potentially more harmful than that in the 1930s because…” no one will ever have any confidence in the casino again, in the rule of law and American justice, or in the the so-called social contract. Once again the cover-up proves more damaging than the original crime. American culture itself is grievously injured, perhaps irreparably.

    1. nowhereman

      Yes, this is the problem in it’s entirety, no one believes in the system any more. No-one believes the politicians. The “economists” have no credibility. The media is in collusion with the power brokers, and the ordinary citizen is on their own.
      We didn’t start the revolution, but we are up for the fight. We now know who the enemy is and it isn’t going to be pretty.

    2. Joe Zeigler

      Hear, hear . . . yet the tale continues. Contributing to the politicial division in the U.S. is our leaders failure to communicate. We are in trouble and it’s time to work together not spread false rumors of recovery.

    1. Expat

      And I suppose we should give mass murderers a pass if they admit killing is wrong and describe their actions as heinous? Greenspan is not a two-handed economist; he is a no-handed economist.

  6. bob

    Greenspan is smart. He is moving to the other side of the trade.

    That or self-preservation. He knows how bad this ends up and is hoping to remain a two handed economist.

    “President Harry S. Truman once said he wanted an economist who was one-handed. Why? Because his economic advisors would typically give him economic advice stating, “On the one hand….And on the other….””

    1. Toby

      I don’t think smart is the right word. I’d say he’s so intelligent that he’s stupid. His belief in his own powers of comprehension and obfuscation seems to have convinced him he was infallible. Believing in your own infallibility is stupid.

      His maneuvering is cowardly and self-serving, and will probably only add to the cancerous cynicism which is crippling the US.

  7. sam hampster

    ‘Greenspan also said “fiscal affairs are threatening this outlook” for recovery.’

    In other words, the next step is for the oligarchs to cut granny’s health care benefits and steal her grocery money.

  8. DavosSherman

    Who the f*** cares?

    Faber used to work with Greenspan. His job was to translate what Greenspan said about the market. He’d just write: See front page of WSJ.

    Greenspan is a good repeater.

  9. John

    My take on Greenspan—they just got the ugliest mug they could find and made him the guy who talked to the press.

    It only took one look and people would say “ugh” and turn away and never really listen to a word he said.

    It worked for years. For them.

  10. psychohistorian

    Just think of where the world would be if Greenspan and his fellow puppet Reagan hadn’t arranged to rip off Social Security for tax breaks for the rich.

    Greenspan is a scum bag that should be in prison.

  11. gordon

    Greenspan said ” BUY ADJUSTABLE MORTGAGES” at the top of real estate, when we had almost the lowest FIXED RATES (5%or so), he said, HE NEVER SAW IT COMING, NOBODY DID, he has been trying to RE-WRITE history, like Cheney, this slime ball needs to be SHUTUP! He’s a FRAUD, a IDIOT, a ASSHOLE, a LIAR, and the more people on these blogs realize what these slime balls have done, the better. All the apologists that work for the financial industry on these blogs also should be exposed for their fraud, and deception, believing things will return to Greenspan times. It’s OVER, it’s DONE, get over it, and silence this asshole, for God’s sake, this a-hole makes $100K per speech? Only in America, Land of the DEBTORS! This entire country is nothing but speculators, debtors and those living off the government.

    1. LeeAnne

      Not to put too fine a point on the subject of Greenspan. He has been the leader of the bullshit bubble. It too shall burst.

  12. Hugh

    Amazing that anyone should listen to a massive screwup like Greenspan on anything, but especially on what he so monumentally screwed up. The Fishers of this world are few and far between.

    I would also be leery of such lists of names. I am not a name but I have predicting a smashup in 2011 since shortly after the meltdown in September 2008. In part, I have done this in the hope that by broadcasting the danger steps might be taken to mitigate or avoid it. With our elites so given over to looting, this hope has proved vain. But getting back to the list, Stiglitz is the only first rate macroeconomist on it. Soros is a great trader but, as with Buffett the great investor, mediocre when it comes to understanding the large scale movement and dynamics of markets. Bernanke should not be trusted for the same reason as Greenspan and because his research into the Great Depression was profoundly flawed. There is also a huge difference between “could be worse” and “will be worse.” The first is a hedge, the second puts one’s credibility on the line.

    1. NotTimothyGeithner

      There is one reason to listen to Greenspan. The guy can be counted on to always be wrong, so he is useful for quickly determining the wrong course of action.

  13. Mickey Marzick Akron, Ohio

    “Mea culpa, mea culpa, mea maxima culpa!”

    Too little, too late for this profetic [misspelled with purpose] apologist. May you rot in hell with Ayn Rand…

    1. Mickey Marzick Akron, Ohio

      Addendum: I might add… nothing more than crocodile tears! Is anyone else apologizing for doing God’s work on earth?

  14. liberal

    The fact that someone who screwed up as massively as Greenspan hasn’t seen fit to commit suicide in the manner of some Japanese leaders is an embarassment to our species.

  15. Eric L. Prentis

    Why this Depression will definitely be much worse than the Great Depression:

    1. Bernanke at the Federal Reserve bails out zombie banks by giving them $1.5 trillion dollars which goes to the LIARS, CHEATS and CROOKS who caused the global credit crisis—and they now persist in repeating their fraudulent crimes, even rewarding themselves approximately $124 billion dollars in bonuses for so doing.

    2. Fed Funds interest rate at zero percent causes the US currency to be used in the CARRY TRADE; good for Wall Street and the rest of the world, but bad for US savers and money not available for a Main Street recovery.

    3. Congress rescinds mark-to-market accounting rules in 2009, meaning that all banks’ financial numbers are pure FANTASY which will definitely come back to destroy us in the end.

    4. Congress PAPERS OVER the credit crisis with more debt while GDP shrinks, consequently, the US today is more financially fragile then the start of this economic calamity, in December, 2007—which only postpones the eventual crash.

    5. US private-and-public-debt-to-GDP stood at 260% at the start of the Great Depression, currently, when adding in the GSE debt from Fannie Mae and Freddie Mac of $6.3 trillion dollars—US debt-to-GDP is 420%, AND GETTING WORSE!

    6. The Gramm-Leach-Bliley Financial Services Modernization Act (1999) and the Commodity Futures Modernization Act of 2000—originally passed to protect us from two prior financial crises in 1907 and 1929—deregulate the US financial system and allow the opaque $600 trillion dollar derivatives market to develop; it is only a question of WHEN—not if—this WILL EXPLODE!

    7. Politicians are BANKERS’ BITCHES; and nothing constructive is happening.

    Have a good day.

  16. Blissex

    «Why this Depression will definitely be much worse than the Great Depression: [ … lots of financial reasons … ]»

    The reasons you give are secondary. The really big differences are in the real economy:

    * In the 1930s the USA still had 40-50 years left of rising domestic oil production.

    * In the 1930s population was a lot smaller, there were still some underdeveloped prime land and resources.

    * In the 1930s there was no other significant country growing as fast as the USA.

    * In the 1930s the military-industrial complex did not exist yet.

    The major advantage of the 2010s is that technology, especially as to electronics, materials and biotech is better, so we can do a lot more with less; also transportation is way better (the defense highway system is still the key). But what really matters most is energy after all, and peak USA oil happened 40 years ago.

  17. shawn

    Is there anybody who does not want to have an ipad touch?

    Apple has once again produced a fruit of genius—the ipad touch. The fresh product of Apple, iPad touch, is one of the most coveted multi-purpose devices that permit users to browse the Web, use email, play music and games, store photographs and watch videos, TV and films. It also features a laptop or a netbook but it is smaller than that. In addition, the device is 0.5 inches deep and weighs just 1.5 pounds – lighter than any netbook and has a 9.7-inch LED-backlit display with IPS technology. It also contains a 1GHz Apple-built A4 processor which includes the CPU and graphics. It’s got a 178-degree viewing angle and sports a 1024768 pixel resolution display at 132 pixels per in.. Sophisticated, isn’t it? Who doesn’t want to get a feel of its uniquely-designed and sleek body?

    Features that would make you wish for a free ipad touch just so you could get your hands on the coolest widget of today.

    This is perhaps because iPad applications were designed from the bottom up to exploit the large multi-touch screen. All of these apps work in any alignment. That suggests iPad permits you to execute things you can not do on any other machine. And it has the following features for such a sleek and light gadget :

    The giant multi-touch screen on iPad lets you see net pages as they were intended to be seen – one whole page at a time.

    by using a split-screen view, you can see both an opened email and all the messages in your inbox. Photos
    One of the other good features of iPad is easily importing and synchronizing pictures from your PC. any sort of video can simply be observed on the massive and high-resolution screen on the iPad. IPad has a big screen with no buttons and no other distracting features. So you can watch your HD flicks, television shows or any videos by feeling completely dunked.

    iPad is integrated with iPod apps. This also means what you can do with an ipod, you can do with an ipad. iTunes
    To browse and buy podcasts, TV shows or music, just tap on the iTunes Store icon. You may quickly find thousands of TV shows, movies, songs and podcasts. IPad also allows you to preview songs before you purchase them.

    App Store
    iPad is virtually integrated with 140.000 apps from the App Store. By drumming the App Store icon on the screen, apps can be scanned, purchased, and downloaded wirelessly directly to the iPad.

    iPad offers us another a way to read or buy books. Maps
    ?t is even feasible to see topography with the new terrain view. But there is more : you may also search for a close-by business type and tap the business to see the route and directions from where you are.

    iPad uses a sweeping display and huge, onscreen keyboard to make jotting down notes straightforward for you.

    iPad provides the calendar you need by displaying Day, Week, Month or List views.

    Attention Search
    Its focus Search feature even permits you to search apps you have downloaded from the App Store. This allows you to quickly find what you’re trying to find.

    Now, with lots of incredibly cool features, who wouldn’t want one indeed?

    True, the ipad could have other disappointments too, like the price . I mean, just imagine how such a light gadget could carry lots of hi-tech features in its body ; you certainly won’t expect it to be as cheap as you want it to be. Or certainly you could not expect Apple to create such a device only to give away free ipad touch to us, right?

    However, there are sites that offer to offer you free ipad touch if you complete their offers and if you’re actually prepared to own one, you can check for free ipad touch offers in the net ; Or if you can afford to purchase one, why not? Either way, the ipad touch won’t give you any regrets for purchasing it. I believe those dazzling features, fascinating and classy design is reason enough as to why you can purchase one right now!
    . Free Ipad touch

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