Is Alan Greenspan low interest to be blamed for the financial mess we are in?

(Last Updated On: July 21, 2010)

Is Alan Greenspan low interest to be blamed for the financial mess we are in?
As you can imagine, I have had little time posting on this blog as I have been busy trying to get to translating solution written in Java. This project is different and unique. As it stands, I have decided to talk about more general financial topics with little about technology. This is for now until and squeeze out more time in the future.
Anyhow, I am part of a few Linked In groups that talk about Quant related items. One topic that came up was the talk about the low interest rate that started this whole mess. Thanks to Alan Greenspan, our last two generation are used to next to nothing interest rates. This has been like this since the nineties where all this suffering has been taking place. Many Western people have not seen much increase in their salaries as compared to what you pay in expenses. This of course includes big ticket items like houses or cars.
Greenspan believed everyone should have houses so we all now have recently paid the price with all this subprime mortgage stuff. Should he be blamed for part of this problem we are facing? I personally think yes. One very good point raised in my Linked IN group was that it created cheap liquidity which results in much higher speculation on the markets. I totally agree with as it has increased over the last twenty years. We are taking huge risks with borrowed money.
A good example of this was started with Lehman Brothers, they believed in creating an ultra money machine based on pure math formulas. Did they actually do any back testing for these theories? When the financial markets melted down, they were caught with their financial positions they could not unload as other banks did not trust.
Just another thought.

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

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