10.23.2008

Greenspan: "once-in-a-century credit tsunami"

Greenspan Concedes to `Flaw' in His Market Ideology

Excerpt:

Former Federal Reserve Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.

``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' Greenspan added he was ``partially'' wrong for opposing the regulation of derivatives.

Greenspan's contrition came after lawmakers and Fed watchers increasingly blamed the former Fed chairman for helping cause the crisis with lax oversight of the housing boom and derivatives markets. Normally afforded deference by Congress, he endured almost four hours of questions from lawmakers less than two weeks before a national election.

``Greenspan is finally taking some responsibility for his actions,'' said Paul Kasriel, director of economic research at Northern Trust Co. in Chicago and a former Fed official. ``The damage has been done. His reputation has definitely been tarnished.''

Greenspan, responding to questions, said only ``onerous'' regulation would have prevented the financial crisis. Stifling rules would have suppressed growth and hurt Americans' standards of living, he said.


Comment: Goes on to say he is not infallible or omniscient. That's good to know!

8 comments:

  1. Hi, JP

    I haven't posted to your blog for awhile. I've been busy. But speaking of the credit tsunami and politics and who has the right answer, I used to think Obama was an Arab, but this video cleared it up for me. Now I feel foolish for thinking that to begin with. Here's it is. (Plus, it's got a good tune and I can tap my toes to it.)

    http://www.youtube.com/watch?v=SO8uEo-Cn6c&feature=related

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  2. Interesting progression. Back in the 1960s and 1970s, you had Greenspan the gold standard advocate. In the 1980s and 1990s, you had Greenspan the monetarist. Now, apparently, we've got Greenspan the near-Keynesian.

    It used to be that people said that someone who wasn't liberal at 30 had no heart, and someone who wasn't conservative by age 50 had no mind. Looks like Greenspan is going the opposite way.

    You're awful quiet lately, too, Jim. Hope & pray that you're doing OK.

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  3. I'm wondering the same thing, bb.


    BB, I'm not so sure Greenspan isn't smarter than we think and he knew all along what makes good monetary policy. Maybe he has had a change of philosophy, but I'm not sure.

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  4. If he knew all along what makes good policy...well, explain what's going on in financial markets to me, then. Count me not persuaded. I'll be back to reading some von Mises now..... :^)

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  5. Alan Greenspan understood the danger of fiat money, and wrote (1966!):

    "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold . . . The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth."

    Twenty years later, when Alan Greenspan was Chairman of the Federal Reserve System, he orchestrated the cabal's effort to destroy the U.S. economy. Alan Greenspan:

    opposed the Congressional effort to increase taxes to offset President Bush's disastrous spending program,


    lowered the discount rate (the FED's interest rate) to 1% which encouraged borrowing,

    encouraged unqualified buyers to use ARMs to purchase homes,

    opposed the Congressional effort to regulate hedge funds and derivatives, and

    increased the money supply which precipitated the massive inflation that threatens the survival of our currency today.

    Why did Greenspan do those things? Several years ago, when Congressman Ron Paul asked him if he still believed what he wrote about gold and deficit spending in 1966, he responded:

    "I have recently read the article again, and I would not change a word." (Wow!! <----my comment)

    ReplyDelete
  6. Alan Greenspan understood the danger of fiat money, and wrote (1966!):

    "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold . . . The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth."

    Twenty years later, when Alan Greenspan was Chairman of the Federal Reserve System, he orchestrated the cabal's effort to destroy the U.S. economy. Alan Greenspan:

    opposed the Congressional effort to increase taxes to offset President Bush's disastrous spending program,


    lowered the discount rate (the FED's interest rate) to 1% which encouraged borrowing,

    encouraged unqualified buyers to use ARMs to purchase homes,

    opposed the Congressional effort to regulate hedge funds and derivatives, and

    increased the money supply which precipitated the massive inflation that threatens the survival of our currency today.

    Why did Greenspan do those things? Several years ago, when Congressman Ron Paul asked him if he still believed what he wrote about gold and deficit spending in 1966, he responded:

    "I have recently read the article again, and I would not change a word." (Wow!! <----my comment)

    ReplyDelete
  7. Do you think someone should check on JP? This is unlike him to be completely quiet for so long.

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  8. Away on vacation .... just got home. Thanks for thinking of me

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