Doing the Same Thing Over and Over Again and Expecting ...



Doing the Same Thing Over and Over Again and Expecting Different ResultsBring the Financial System Back From the Bring of InsanityPatrick Hagertycentercenter00An appeal to the federal government to save our prosperityExecutive SummaryIn February of this year the S&P 500 closed above 2,100 for the first time in history. If you bought the S&P 500 same index on January 1st of last year you would have made 12% by the time you rang in the new year and if you had listened to Warren Buffet when he wrote his op-ed titled “Buy American. I am” in October of 2008, you would have more than doubled your money by now. It is safe to say that we have left the Great Recession behind and good times are ahead, but in 2006 many were saying the same thing. The market has a way of fooling even the brightest minds in Washington and on Wall Street, and it has made that fact clear countless times in the past. The only thing we can do is to pay attention and be prepared to take action if crisis occurs.The best way to prepare ourselves is to learn from past mistakes. Every economic environment is unique in its own ways but there are also always similarities. Right now the Federal Reserve is dealing with the low interest rates created by the subprime mortgage crisis recover efforts. Now that the financial markets have recovered it is time to change our mindset from recovery to sustainability. The financial crisis hurt everyone, but the recovery left low and middle-income individuals behind as the income inequality gap continued to grow. In order to achieve a truly sustainable economy the Federal Reserve needs to stop giving Wall Street preferential treatment and help the masses. Now that quantitative easing is over, the Federal Reserve needs to use its monetary stimulus powers to create real wage growth on Main Street. At the same time, regulatory measures need to be taken to keep history from repeating itself in the form of another government bailout. Americans deserve to believe in the American Dream, and it is time to take steps to make that happen.table of contents TOC \o "1-3" Introduction PAGEREF _Toc292580530 \h 3The Past PAGEREF _Toc292580531 \h 3The Federal Reserve PAGEREF _Toc292580532 \h 3The Meaning of Yield Curves PAGEREF _Toc292580533 \h 5Japan’s Twenty Year Struggle PAGEREF _Toc292580534 \h 6The Rise and Fall of Bubbles PAGEREF _Toc292580535 \h 7The Dot-Com Bubble PAGEREF _Toc292580536 \h 9The Subprime Mortgage Crisis PAGEREF _Toc292580537 \h 11Recommendations PAGEREF _Toc292580538 \h 15Treat the sickness, not the symptoms PAGEREF _Toc292580539 \h 15Those Who Cannot Learn From History Are Doomed To Repeat It PAGEREF _Toc292580540 \h 18Concluding Remarks PAGEREF _Toc292580541 \h 19Appendix PAGEREF _Toc292580542 \h 20Works Cited PAGEREF _Toc292580543 \h 26IntroductionAmerica is still licking its wounds that came from the subprime mortgage crisis while wondering how seemingly rational people could have behaved so irrationally that they almost destroyed the entire United States financial system. The markets have bounced back to pre-crisis levels, but the low interest rates required to bounce back so quickly still remain and are beginning to seem risky as Japan struggles to keep its economy afloat. There is a way out of this problem and if any nation can forge through a tough issue it is the United States. It will require an in-depth understanding of past financial crises and significant group effort from the Federal Reserve and the rest of federal government, but the ends will justify the means. Change is necessary to keep history from repeating itself, and there is no better time for change than in the wake of disaster.The PastThe Federal ReserveThe Federal Reserve System (“The Fed”) was created in 1913 following the Panic of 1907 after congress passed the Federal Reserve Act. The Panic of 1907 was a stock market crash that followed a failed attempt to corner the copper market and the subsequent collapse of Knickerbocker Trust. Knickerbocker was the third largest trust at the time and caused a run on the banks. Even though J.P. Morgan and several other wealthy businessmen attempted to prop up the market as they had done successfully in 1893, the lack of U.S. Treasury reserves coupled with continued public fear were too much to overcome.Initially, the Federal Reserve was created as a lender of last resort in order to remove this burden from wealthy individuals. It was also given the power to control all monetary policy in the United States through the use of several different tools. The Fed has the power to set the Federal Funds Rate, the overnight rate at which member banks lend excess reserves to each other. While the Federal Funds Rate is an effective tool, the Fed is cautious to change it so their main tools are open market operations, the discount rate and reserve requirements. Open market operations refers to the buying or selling of government securities in the open bond market while the discount rate and reserve requirements are policy changes. The discount rate is the rate at which member banks borrow from the Federal Reserve and reserve requirements determine the amount of capital a member institution must keep in reserve.Each of these tools is used to control monetary policy. More specifically, the Federal Reserve Act states that the goal of Fed monetary policy is to “maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” The description clarifies the goal of the Federal Reserve by laying out specific metrics of unemployment, inflation and long-term rates as measures of successful policymaking. The Meaning of Yield CurvesThe Federal Reserve is able to use monetary policy to control both short-term and long-term Treasury Yield rates. Changing the Federal Funds Rate and Discount Rate, which is set by the Federal Reserve, controls short-term rates. Long-term rates, on the other hand, are more difficult to control and require open market bond sales or purchases by the Fed. To understand this process it is necessary to understand how the United States Treasury market works.When the government issues a bond they do so with a stated “coupon”. This coupon determines the semi-annual payment that the bondholder receives and has a face value of $1000. When a bond is traded at “100” it is said to be trading “at par value” and requires an initial investment of $1000. However, in the open market this is usually not the case. Instead, the market decides how much they are willing to pay for a given coupon, which determines the actual market yield. If a bond is trading below 100, or below par, the actual yield is higher than the states coupon since the initial price is discounted. On the other hand, a bond trading above 100 is said to be trading at a premium and the actual yield the purchaser receives is lower than the stated coupon. In other words, bond price and bond yield are inversely related and, as with all securities, the price is determined through open market supply and demand. Through quantitative easing programs, the Fed can control long-term yields by increasing demand and, therefore, price. Between 2008 and October 2014, the Fed accumulated $4.5 trillion in assets including treasury notes and mortgage-backed securities.The most important chart to understand in the bond market is called a yield curve. A yield curve plots bond maturities on the x-axis and yields on the y-axis. For US Treasuries, this curve has maturities ranging from 1 month to 30 years (Figure 1). During normal economic times, the treasury curve will have a positive slope. However, during unusual times in the market, long-term yields can decrease to below short-term and create an inverted yield curve. Since 1970, an inverted yield curve has preceded each of the seven recessions in the United States. The theory behind using the slope of the yield curve as an indicator of a future recession is that people are willing to accept a lower yield to reduce exposure to near-term economic slowdown or decline.Japan’s Twenty Year StruggleFollowing a recession in the early 1990s, the Bank of Japan announced on February 2, 1999 that it would be adopting a zero interest rate policy. Aside from a brief period in 2000 to 2001, it maintained this policy along with implementing quantitative easing measures until 2006. After the subprime mortgage crisis, they again began quantitative easing and have continued to expand the bond-buying program since then. While these programs have allowed Japan to avoid a depression, they have experienced five recessions since the first announcement of a zero interest rate policy (Figure 2).Prior to the recession in the early 1990s, Japan saw a negative difference between their 10-year and short-term interest rates, indicating an inverted yield curve. However, in the five recessions since there has continued to be a positive spread between these two interest rates. Instead of allowing the economy to recover more quickly, low interest rates have kept Japan’s annual GDP growth below 2% and caused them to lose a valuable recession indicator (Figure 3). The Bank of Japan’s experience with low rates is a perfect example of how easy it is to implement low rates and how difficult it can be to return to normal rate policies. Simon Grose-Hodge, the head of investment strategy for LGT Group, says, “They simply can’t afford any meaningful increase in interest rates…the Japan experience suggests very low rates are going to be around for a long time”. Grose-Hodge realizes that as the Bank of Japan has become encumbered with growing debt levels, it becomes increasingly difficult to raise rates without risking an economic downturn. Therefore, Japan has been forced to continue their low rate policies even as they continue to see lagging results. The Rise and Fall of BubblesHistorically there are four main “legs” of an asset bubble: low rates, leverage, laissez-faire government policies, and public participation. It is easiest to think of these legs as holding up the bubble as they would a table. As long as they continue to exist and increase, the bubble is sustained and continues to grow. However, once a single leg begins to shake it is only a matter of time before the bubble bursts, just as a table would collapse.All of these legs are a result of different aspects of government policy. As discussed earlier, the Federal Reserve controls interest rates through monetary policy decisions. Low rates are typically the first leg of the bubble since they generally appear following a recession as a means of economic stimulus and can quickly lead to the appearance of the other three legs. Laissez-faire government consists of deregulation of either the entire financial market or a specific industry where the government neglects to require sufficient oversight. This can occur for a number of reasons, including lobbying efforts by corporations or new and unregulated products. The next leg of a bubble is increased financial leverage. Leverage consists of companies or individuals carrying higher than normal levels of debt that allow them to realize high returns as a result of increased risk in strong financial times. Leverage is a result of the prior rise of the first two legs since low rates encourage increased borrowing and government must fail to implement capital requirements as borrowing increases. The final leg of a bubble is public participation. The unsophisticated public investor is always the last one to the party and provides to final push to create a bubble. When unsophisticated investors beginning suddenly investing it creates momentum that irrationally drives the market higher. Joe Kennedy famously took advantage of this fact when he exited the stock market before the Crash of 1929 after receiving a stock tip from a shoeshine boy. This is an example of public participation from before the Great Depression, but it is far from typical. Generally, this leg can be measured by mutual fund participation statistics since they are the most accessible investment vehicles for the general public (Figure 4).These four legs are the cause of an asset class increasing in value enough to create a bubble, but if they do not falter the bubble will not burst. Historically, public participation, the last leg, eventually causes one of the other legs to start “shaking”. In the time leading up to and immediately following Black Monday in 1929 all three of these legs collapsed. First, the Fed raised the Federal Funds Rate three times in 1928, causing low rates to quickly disappear. Then, initial margin requirements were reduced from 90% to 50%; meaning margin investors could now borrow only half of the cost of their investment instead of 90%, resulting in suddenly reduced leverage. Finally, following the stock market crash, the government passed the Smoot-Hawley Tariff Act and ended a period of laissez-faire government with a 50% increase in import duties.The Dot-Com Bubble On March 10, 2000 the Nasdaq Composite Index, a market index for the Nasdaq exchange that hosts mostly technology companies, closed at an all-time high of 5,048.62, which represented a five-year annual growth rate of almost 45%. Exactly 31 months later, the Nasdaq hit a low of 1,108.49 following the burst of the Dot-Com Bubble. This bubble had all of the telltale signs of previous bubbles and yet very few paid any attention, even going so far as to ignore Fed Chairman Alan Greenspan’s warned, “Irrational exuberance has unduly escalated asset values”.All four legs of an asset bubble were present in the years leading up to the boom and bust of the Dot-Com bubble. This time, however, the easy money was not a direct result of extremely low interest rates, although the 10-Year Treasury had been in steady decline since 1982. Instead, technology and Internet companies were receiving large venture capital investments and Initial Public Offerings (IPOs) were frequent and wildly successful (Figure 5). In 1999 alone there were 457 IPOs in the United States made up of mostly Nasdaq companies, 117 of which saw their value double in the first day of trading. While margin investors in the 1920s were gaining leverage through margin accounts where they borrowed a large portion of the capital needed to buy stock, tech companies in the Dot-Com boom leveraged their only asset: people. Many of the companies that went public in 1999 had little to no earnings and they could not secure debt financing since in many cases their most valuable asset was the office computers. So, while they did not leverage their balance sheets in a traditional sense, they secured equity financing at never before seen multiples, causing the Nasdaq Composite price-to-earnings ratio to reach above 100x forward earnings (Figure 6). In the late 1990s the laissez-faire government leg appeared when congress passed the Taxpayer Relief Act of 1997. The Taxpayer Relief Act introduced several tax reduction measures including a lower capital gains tax, the creation of Roth IRAs, and various exemptions for personal residence sales, estate taxes, family farms and small businesses. The reduction in capital gains taxes provided by the Taxpayer Relief Act encouraged individuals to invest in the stock market and provided the last leg needed to build the Dot-Com bubble. This additional incentive was all the public needed to begin taking part in technology and Internet IPOs, resulting in the unrealistic valuations of 1999.The Dot-Com bubble did not burst from a single event, instead it was a collection of catalysts that caused the initial crisis and slow recovery that followed. Following the market peak in early 2000, the federal funds effective rate reached 6.5% and the United States experienced an inverted yield curve (Figure 7). Furthermore, Barron’s published an article just ten days after the market peaked and predicted turmoil in the following 12 months. The article cited a study of 207 Internet companies conducted by Pegasus Research International, an Internet stock evaluation firm, that stated 74% of the surveyed companies had negative cash flows and predicted nearly a quarter of them would run out of cash in the coming year. Some other warning signs included were the combined $1.3 trillion valuation of Internet companies, numerous insider selling disclosures and a rebound in the Dow Jones after a drop-off in the Nasdaq, signifying a change in investor sentiment with regard Nasdaq stocks. As investors became more rational and realized these risks, the bubble finally burst, causing the Nasdaq Composite to lose more than half of its value in 12 months.The Subprime Mortgage CrisisThe most recent financial crisis began in August 2007 following the collapse of the United States housing and subprime mortgage market. The effects of this crisis continue to linger in the United States economy even though the recession is technically over. While this most recent crisis was more detrimental to the financial system than the Dot-Com bubble, it can once again be understood using the four legs of asset bubbles.Similarly to the Great Depression, the subprime mortgage crisis was most detrimental to the American dream and the average American. As always it began with easy money as a result of low interest rates. 10-Year Treasury rates fell below 6% in the mid-2000s for the first time since the 1960s and consumers were more than willing to borrow to take advantage of potential opportunity. Middle-class Americans began to purchase new homes with easily accessible loans from mortgage lenders across the country. However, as rates continued to remain low and lenders continue approving mortgages, they began to run out of acceptable borrowers. Instead of maintaining strict standards, banks started to make riskier loans to put excess capital to work even when they knew their creditors would likely default on the loan if interest rates rose, a practice known as subprime lending. Financial institutions and consumers alike began to take on excess debt; banks leveraged their balance sheets while average Americans bought a larger or second home as the banks cheered on the American dream of home ownership. All of this was possible because of deregulation that came from 1999 in the form of the Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act repealed the Glass-Steagall Act of 1933, thereby removing restrictions on universal banks and allowing investment banks, commercial banks and insurance companies to operate as a single entity. Glass-Steagall was enacted after the Great Depression and carried the United States economy through more than 50 years of prosperity. However, by 1999 many people thought the bill should be repealed including Treasury Secretary Larry Summers who said it would benefit the economy “by promoting financial innovation, lower capital costs and greater international competitiveness”. Eventually Sandy Weill, the Chairman of Travelers Group lobbied congress to repeal the bill so he could acquire Citicorp, a commercial bank, and form Citigroup. Citigroup became the first universal bank since before the Great Depression. This merger led to several other megamergers including JP Morgan and Chase Manhattan. More importantly, joining these two businesses together gave a bank the ability to issue loans using federally-insured customer deposits, which Glass-Steagall prohibited, and subsequently securitized that loan debt into complex financial products called collateralized debt obligation (CDOs). This new breed of structured financial product allowed banks make to profit on both ends of a mortgage loan while subsequently hedging their risk through purchasing Credit Default Swaps (CDSs), essentially a CDO insurance policy, from insurance companies like AIG. Their balance sheets appear less risky through holding CDSs even though banks like Lehmann Brothers had leverage ratios as high as 44:1 debt-to-equity. The public was involved in every step of the housing bubble up until this point, but when pension plans and other seemingly low-risk funds started buying CDOs that were rated as AAA debt instruments, the entire wealth of the American public became entrenched in the risky behavior of large banks. Subprime lenders continued making more and more loans as the demand for CDOs continued to increase until, eventually, years of excess on Wall Street drove the entire financial system to the brink of collapse.The Case Shiller Home Price Index hit a high in 2006 following several years of subprime lending (Figure 8). Shortly thereafter, the treasury yield curve became inverted for the first time since before the Dot-Com bubble (Figure 9). When it began to fall many subprime borrowers, who had put minimal cash down on their homes, found that they owed more on their mortgage than their home was worth. Logic began to prevail and many of these creditors defaulted on their debt, resulting in further declines in United States home prices. As this trend gained momentum, banks quickly realized that they were overleveraged and inadequately hedged. The first major market shock occurred in March 2008 when Bear Stearns was no longer able to honor its debts and was acquired by JP Morgan in an emergency sale. Even though the housing market continued to decline, the large banks managed to stay afloat through the summer. This all changed in September when Lehman Brothers, which reached a peak leverage of 44:1 and highly exposed to the subprime mortgage market, faced a liquidity crunch. Lehman, however, did not receive the same emergency aid that Bear had and eventually declared Chapter 11 bankruptcy. Lehman’s demise caused a panic in the markets and soon nearly every large financial institution was faced with a lack of liquidity. In the face of this crisis, congress passed Emergency Economic Stabilization Act of 2008, which gave the Secretary of the Treasury $700 billion to help banks liquidate troubled assets and put measures in place to help victims of predatory lending restructure their mortgages so they could keep their home. The Emergency Economic Stabilization Act was the only the second bailout in United States history and the first time the Federal Reserve adopted a zero interest rate policy. Since 2008 the economy has recovered from the recession but there are still lasting effects. The Fed has continued to keep rates at near-zero levels and while unemployment has returned to normal levels, the percentage of the total population employed is still well below 2008 levels. This is more meaningful to the state of our economy because it means that more people have either given up on looking for work or are working under the table. We did not see this during the aftermath of the Dot-Com bubble because the people affected most were wealthy investors who did not change their consumption habits since they remained wealthy even after the bubble burst. However, following the subprime mortgage crisis average Americans lost their homes, which represented more than 60% of the net worth of middle-quintile Americans (Figure 10). This resulted in an extreme decrease in net worth for low and middle-income Americans, a much larger group than the tech investors (Figure 11). After this loss of wealth many Americans were forced to curb their consumption habits, thereby slowing the economy as a whole. The important difference in this all too familiar of a bubble is the parties involved; it is an example of sophisticated Wall Street investors taking advantage of a favorable economic environment by exploiting unsophisticated investors and coming out on top even after near-disaster. Effects of this bubble will be observable for a long time because of the structural changes it caused in the United States economy.RecommendationsSince the Federal Reserve Act went into effect the United States has gone through numerous boom and bust cycles including the Great Depression, which remains the period with the highest rate of unemployment in United States history. Yet even after another market crash in 2008, nearly a century after the Fed’s inception, they continue to promote the same goals. Only in hindsight it is possible to identify the same root causes of every market bubble, with the only differences being who won, who lost, and which asset was overinflated. The United States government needs to rethink their strategy towards fiscal and monetary policy in order to avoid future sudden market events.Treat the sickness, not the symptomsThe stated goal of the Federal Reserve is “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates”. However, since the subprime mortgage crisis in 2007 the Fed has failed to achieve those goals. According to the most recent statistics, unemployment is currently 5.5%, trailing 12 month inflation is -0.1% and the 10-Year Treasury yield is 2.24%. While the unemployment rate is in line with the median rate of unemployment, the employment population ratio is still near the lowest level since before 1985. Furthermore, the Fed recently reported that its target inflation rate is 2% yet over the last 12 months we have experienced slight deflation while maintaining a 10-year rate that is 155 basis points below the historical median.Even though the recession ended more than five years ago, the Federal Reserve has maintained a policy of keeping short-term interest rates near zero. The role of the Federal Reserve is, as Chairman William Martin Jr. once said, “to take away the punch bowl just as the party gets going”. The problem now is that the party clearly started a long time ago and now we have surpassed the inflation-adjusted all-time high of the S&P 500. However, in order to get there the Fed had to sacrifice its most valuable tool of monetary policy: the power to set short-term interest rates. Unfortunately, the solution is not as simple as raising the short-term interest rate and weathering a brief economic downturn. Ben Bernanke recently released an article that explained raising interest rates too soon will move us too far from the equilibrium interest rate, which is currently very low. If the Fed moves rates too high the economy will eventually slow and lead into another recession and if rates are kept too low the economy will “overheat” and we will experience excessive inflation. In other words, we have forced ourselves into a situation similar the one Japan has faced since adopting a zero interest rate policy for the first time in the 1990s. If we do not remedy the situation we will also go through recessions with near-zero short-term rates just as Japan has in the last two decades. Not only will we go into these recessions without the ability to stimulate growth with low rates, there will also be no warning this time as there has been in the past. If the short end of the yield curve is kept near zero it will be impossible for the curve to invert and we will have lost the single best recession predictor we have. The problem of stagnant low interest rates is one that needs to be solved as quickly as possible in order to maintain economic stability in the United States.Stagnant low interest rates are merely a symptom of a larger problem with Fed policy. Since the subprime mortgage crisis, the Fed has relied entirely on monetary policy to solve our economic problems. While the economy has grown as a whole, real income growth only recently crossed into positive territory and we are now facing increasing wealth inequality. In order to solve this problem the Federal Reserve needs to change their goals. Rather than striving for maximum employment, the Fed should be striving for better employment for the portion of the population who has left the labor force. Charlie Munger, the Vice President of Berkshire Hathaway, recently said, "I'm deeply suspicious about printing money and throwing it around instead of printing money and building infrastructure and so on." Munger is right in being suspicious of the Fed strategy of throwing money around. Quantitative easing and low rates clearly helped to pull the United States out of the recession but it is time to begin spending money on creating jobs through public works projects rather than creating policies to pump up financial assets that mostly benefit the wealthy. The Federal Reserve will need congress to work alongside them in approving infrastructure projects while simultaneously using their ability to control monetary policy to make new ventures profitable. The last five years have proven that low rates can pull the financial markets out of a recession, but in order to achieve long-term growth and prosperity we need to shift our attention to creating American jobs and real wage growth.Those Who Cannot Learn From History Are Doomed To Repeat ItThe Great Depression, the Dot-Com bubble and the subprime mortgage crisis are just three of many examples of asset bubbles where four clear legs can be identified. Each time a market crash has occurred the government has formed an investigative committee, determined a cause, and passed legislation to remedy the problem. However, we continue to have market crashes even though new regulations are supposed to prevent them from occurring. Rather than waiting for another crash to occur before passing legislation, it is time to implement preventative measures to keep irrational exuberance at bay.Following the Great Depression formed a commission led by Ferdinand Pecora to find the cause of the 1929 market crash. At the end of the investigation, congress passed three bills, one of which was Glass-Steagall, which significantly increased government oversight of the financial industry. The passing of these three acts marked the beginning of a period of more than 50 years where there were no major market crashes. Even after a long proven track record of success, Sandy Weill was able to have this bill repealed, paving the way for universal banks and the eventual subprime mortgage crisis. Following the subprime mortgage crisis the government passed Dodd-Frank, which again created oversight and added a provision for liquidating “too-big-to-fail” banks, but the universal banks still remain today. The continuing existence of universal banks means that they can still use federally insured customer deposits for speculation. The only way to remedy this is to reinstate Glass-Steagall and break up the banks once again into more easily managed and regulated entities. The combination of the Dodd-Frank’s modernized regulations and Glass-Steagall’s time-proven effectiveness will allow the financial system to operate with less risk and hopefully lead the United States to another half century without a financial crisis.Concluding RemarksShow me someone who says the can predict the next asset bubble with absolute certainty and I will show you a liar. The very nature of a bubble is that they are not predictable and before investors have time to identify and plan a graceful return to rationality it is already too late. However, there are steps that the Federal Reserve and regulatory agencies can take in order to prevent a bubble-friendly environment from growing. Doing so will require sweeping changes in thought regarding regulatory strategy and cause some short-term pain, but in the long-run we will all be better off. It is time for the Federal Reserve to modernize its goals to conform to today’s economic environment and work together with congress to implement legislation that allows for more strategic monetary policy.AppendixFigure 1: Treasury Yield Curve on May 6, 2015Source: Figure 2: Japanese interest rates and recessionsSource: Figure 3: Japan GDP Growth RateSource: Figure 4: Total number of US Mutual FundsSource: web.stanford.eduFigure 5: IPO Proceeds 1980-2009Figure 6: Price to Earnings Ratio of Nasdaq and S&P 500Figure 7: Treasury Yield Curve as of April 3, 2000Source: Figure 8: Case Shiller Home Price Index in March 2015 dollarsSource: Figure 9: Treasury Yield Curve as of November 1, 2006Source: Figure 10: Home burden by net-worth quintileSource: FiveThirtyEightEconomicsFigure 11: Effect of subprime mortgage crisis on richest and poorest AmericansSource: FiveThirtyEightEconomicsWorks CitedBernanke, Ben S. "Why Are Interest Rates so Low?" Ben Bernanke's Blog. The Brookings Institution, 30 Mar. 2015. Web. 06 May 2015."Bill Gates: Low Rates Pose Leverage, Bubble Risks." Yahoo! Finance. Yahoo!, 4 May 2015. Web. 06 May 2015.Brodwin, David. "Glass-Steagall Critics Get a Little Bit Right and the Rest All Wrong." US News. U.S.News & World Report, 23 Aug. 2013. Web. 06 May 2015.Colombo, Jesse. "The Dot-com Bubble." The Bubble Bubble. N.p., n.d. Web. 05 May 2015."Consumer Price Index Summary." U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, 17 Apr. 2015. Web. 06 May 2015.Crossley-Holland, Dominic. "Lehman Brothers, the Bank That Bust the Boom." The Telegraph. Telegraph Media Group, 6 Sept. 2009. Web. 06 May 2015."Employment Situation Summary." U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, 3 Apr. 2015. Web. 06 May 2015.Greenspan, Alan. "Remarks by Chairman Alan Greenspan." The Annual Dinner and Francis Boyer Lecture of The American Enterprise Institute for Public Policy Research. Washington, D.C. 5 Dec. 1996. The Federal Reserve Board. Web. 5 May 2015.Pesek, William. "Japans's Scary Lesson on Slashing Interest Rates." . Bloomberg, 25 Apr. 2013. Web. 04 May 2015.Ro, Sam. "This Definitive Chart Destroys The Argument That We're Reliving The Bubble Of The Late 1990s." Business Insider. Business Insider, Inc, 09 Aug. 2014. Web. 05 May 2015.Rothchild, John. "Fortune." When the Shoeshine Boys Talk It Was A Great Sell Signal In 1929. So What Are The Shoeshine Boys Talking About Now? Fortune, 15 Apr. 1996. Web. 06 May 2015.Schroeder, Michael. "Glass-Steagall Accord Reached After Last-Minute Deal Making." WSJ. Wall Street Journal, 25 Oct. 1999. Web. 06 May 2015.Sufi, Amir, and Atif Mian. "Why the Housing Bubble Tanked the Economy And the Tech Bubble Didn't." FiveThirtyEightEconomics. N.p., 12 May 2014. Web. 06 May 2015."U.S. 10 Year Treasury Note." . Dow Jones & Company, 06 May 2015. Web. 06 May 2015."U.S. Bureau of Labor Statistics." U.S. Bureau of Labor Statistics. United States Department of Labor, n.d. Web. 06 May 2015."Why Are Interest Rates Being Kept at a Low Level?" Board of Governors of the Federal Reserve System. Federal Reserve, 8 Apr. 2015. Web. 06 May 2015.Willoughby, Jack. "Burning Up." Barron's. Barron's, 20 Mar. 2000. Web. 05 May 2015. ................
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