I Saw the Crisis Coming. Why Didn’t the Fed?

Most people could have predicted it and many people did. This includes not only people like Mike Burry, George Soros and others that made money out of the whole mess, but also those bastards in Goldman Sachs who after touting and selling housing debt derivatives for the entire bubble ended up being short on housing just when the bubble burst.

Multiple people in academia predicted the crash. Nouriel Roubini (spelling is wrong) Peter Schif, every economist that ever posted on Counterpunch, etc.

And also of course most ordinary people predicted it. If you look at the housing forums on the Internet from about 3 to 4 years ago you will see that most people were sure there would be a crash and only people that were already deeply invested in real estate were trying to think of ever more creative ways to deny it.

So Greenspan's statements speak more about him than the actual reality. He and the Bush government just surrounded themselves with economists from one very narrow school of thought and did not listen to anyone else. It is not that people did not predict the recession, it is that Greenspan would not listen to anyone who predicted it, therefore nobody that he bothered to listen to predicted it.

Everything you say is accurate except the insinuation that Democrats are mostly at fault. George W. Bush was in office for the worst of it, and he spent his political capital trying to convince people that a war was necessary.

He spent 99% of his political capital on war and at best 1% on everything else. He was far from powerless, having control of both houses of congress. The fact is he was perfectly fine with the GSEs being someone else's problem so nobody would get distracted away from the "war".

Incidentally the GSEs were taken off government books in order to make the budget look better so we could "afford" the Vietnam war.

Figuring out the "when" is definitely the most difficult part. I had been watching the markets and the housing bubble very carefully for years before the crisis finally arrived. It is so amazing how long these things take to play out, and how distorted the markets can get before they finally snap.

Despite the attention I paid to it, I still failed to make a profit. When things finally started unravelling, I took several put option positions (assuming the price would decrease) in the obviously doomed companies, for really cheap prices. But my mistake was not goibg out further time wise. I was up substantially (500% was my best) in almost all my positions within a week or two, but when the fed and other players weighed in with changes to the rules of the stock market, and CEO's taking actions that are blatently fraudulent but not enforced by the SEC, things turned against me and I ended up selling for a 40% loss. Of course if I had simply taken a boring short position I could have made a guaranteed 40-60 percent, but how exciting is that?? :)

Making money in the market, even when you KNOW what is going to happen, is amazingly hard. Especially when the FED and SEC are literally changing the rules on a daily basis, as they were back then, and when CEO's can lie, cheat, and steal with impunity.

Not true. Peter Schiff did predict collapse in Housing as well as in nasdaq. Now he predicts USD collapsing due to the US gov. defaulting on its debt or hyperinflating the currency to get rid of the debt.

You see Housing Bubble was just a single dot. You don't understand anything, if you understand just housing bubble. US is totally indebted and lived from a bubble to another bubble. The last bubble (current) is US debt.

Marc Faber, Jim Rogers, Peter Schiff predicted this crisis, nasdaq crisis and other. if you understand economics and sound money (i.e. GOLD), then these weren't surprises for you. The whole Austrian School of Economics has been predicting this mess for years. Any decent economist understands that USD is finished. US accumulated the biggest amount of debt in the history of the world. With no production... you don't need to be a genius to see that the only thing left for them is to print money. If printed money goes to stock, you got nasdaq bubble. If printed money goes to real estate you got housing bubble. If printed money goes to Treasuries - you get Government Debt bubble. Once this one bursts, no one will lend any more money to the US and this will mean hyperinflation. Turn off TV, turn on brain, buy gold.

Many of the people predicting this collapse were "new players" to the market, not people always predicting collapses. Take the guy who runs seattlebubble.com. He's an ordinary guy who wanted to buy a house, realized prices were really high compared to his expectations, and started digging deeper. He hadn't predicted any past collapses of anything, he just realized that housing costs were unsustainably high and called it. Many of the other bubble-predictors were in the same boat.

The guys always predicting collapses are crackpots. The normal people who called this bubble because they realized house prices had jumped without corresponding changes in income or demographics, but only changes in bank lending standards, were not crackpots.