Alan Greenspan is the former Federal Reserve Chairman; at the same time, he is also the one who led the US economy through one of the largest boom in the history, “Financial Crisis” Moreover, his ideology is “Free Market Ideology,” which means that the government should regulate less on the investments and banks. In other words, it is regulated free, to provide more freedom to the banks to do whatever they want, to take whatever risk they want. According to the movie “Inside Job”, Greenspan was so avidly support the deregulation, which blind him to ignored and violated the law that passed after the Great Depression, “Prevented banks with consumer deposits from engaging in risky investment banking activities”. When Greenspan is still the Federal …show more content…
By allowing the Bush tax cut, it causes a deficit. By keeping the interest rate too low, causes the housing bubble and housing price goes rapidly. By object the regulation toward banks taking risk, causes high debts and banks need a bailout from government. Meanwhile, all of his ideas and operation are favor to the rich, especially to the “masters” in the US economy. He created chances for them to earn bounces and profit in many legal and illegal ways. Although at that time, many CEOs of the major investments firms’ collapse, they still can receive millions of dollars in bonuses. Goldman Sachs is one of them. At that time, Goldman Sachs know there are many risky in the CDOs, and he knows they were almost default; as a result, he decided to get profit from trading the CDOs. (CDOs’ insurance company is AIG, the world’s biggest insurance company). Sachs purchased the credit Swaps from AIG in order to bet CDOs. When he bets more, AIG would give him more back because AIG could not able to follow up on its insurance. Therefore, he would more likely to have more profit from it …show more content…
However, the poor and middle class had lost their jobs and some of them even lost their home. Besides, not only Goldman Sachs had earned more profit but also the investment bank Lehman Brothers and Richard Fold have received nearly $500 million in bonuses. Furthermore, Alan Greenspan’s ideology of “free market” is highly support the tighter regulation of subprime mortgages and other high risk mortgages, which allowed people to borrow money even they could not afford. As a result, between 2001 to 1008, a housing bubble had slowly formed. Since Greenspan endorsed low interest rate and has kept it low for a long time, many people are qualified to borrow mortgages, and housing prices go skyrocketed. Under Greenspan’s leadership and regulation, at the time period, everyone can borrow to buy a house with little or no down payment. Therefore, housing bubble was barreling toward a subsequent crash. Even though the housing bubble is in the edge and can explode at anytime, many investment were still earn profit from this edge. Because the meaning of the “Free Market Ideology” is government should regulate less, government at that time did not get involved or even monitor that