Oracle of Wall St has an epiphany
October 24, 2008 | So there was Alan Greenspan sitting at the witness table before the House Committee on Oversight and Government Reform:
I made a mistake in presuming that the self interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders and the equity in the firms.... The problem here is that something that looked to be a very solid edifice and indeed a critical pillar to market competition and free markets did break down. And that, as I said, shocked me and I don't fully understand why it happened.
Greenspan, former head of the Federal Reserve, along with former Treasury Secretary John Snow and current SEC Chairman Christopher Cox dined on supersized helpings of crow during their testimony, served up by Rep Henry Waxman (D-CA), chairman of the committee. The three professed to be mystified by the collapse of the financial system.
Who could have known?
Greenspan was once held in such high esteem that he served under four presidents — Reagan, Bush (41), Clinton, and Bush (43) — and the world hung on every delphic word every time he spoke. But he has a lot to answer for, now that the house of cards he helped build has come crashing down.
Two huge bubbles have burst in the last decade, technology and housing, both fueled by easy money and cavalier disregard for risk.
The United States has long promoted a laissez-faire version of capitalism to the world, and now the economies around the world lie in shambles.
Oh, yes, Mr Greenspan has a lot to answer for.
I'm not saying that he is completely to blame. But he is an ideologue who held staunchly to his theories, and his reputation largely shielded him from challenge. I mean, greed is powerful, and while markets were soaring hardly anybody questioned Greenspan's policies. Now we're paying the price.
Last updated on Apr 13, 2018