If anyone can defend Greenspan, it must be you. It seems he was the last person to recognize a bubble problem, which had spun out of control for years. Many others did see problems with the explosion of debt and all the derivatives that the financial industry invented, but Greenspan's insistence of no regulation was the strongest voice. He presided over a historic explosion of debt.
I take your references to mindless, ignorant, vicious, etc. as a stab at me, and I want to object. But I know I am in good company in attaching some blame for what has happened to Sir Greenspan, despite your protestations about a lynch mob mentality. Greenspan earned his criticism with great distinction. So we disagree about that, but do agree that no one forced anyone to buy a stock or a home. But we are dealing with human nature, and as you know from history, its not impossible to change their collective mindset, which the present administration is once again trying very hard to manipulate back into the borrow and spend routine.
The highest calling one can ascribe to is to be a consumer, and to show one's love of country, you are encouraged to borrow and spend like there is no tomorrow. That is the economic model and the secret of wealth on Wall St. China has emerged as a possible saviour, taking up the borrowing/spending slack, so we are told. Hopefully their outcome will be better than ours.
In the link I provided, I looked at the very first article, and append it here.
"Former Federal Reserve Chairman Alan Greenspan, long considered the icon of Free Market capitalism, testified yesterday before the House Oversight Committee on the causes of the worst financial crisis since the Great Depression. Committee members, led by chairman Henry Waxman asked the 82
year old Greenspan a series of tough questions in an attempt to isolate "regulatory mistakes and misjudgments" leading up to the collapse. The result was a number of era-defining statements by Greenspan revealing the flaws of absolutist Free-Market capitalism and irresponsible deregulation of the financial system.
Flawed Ideology Enables Systemic Failure
Greenspan noted that he had made a mistake in believing that banks would be rationally compelled, through self-interest, to protect their institutions and shareholders. This belief is a key foundation of free-market capitalist ideology -- that individuals will act rationally to pursue their own self interest and that financial institutions would magnify this rational thought to result in long-term economic growth and increasing general prosperity. What ended up happening, instead, is that both individuals and institutions ignored severe risk in order to pursue massive short-term gains. In this sense, rational self interest rapidly turned into irrational greed. While a few individuals who had gained access and control of key institutions were enriching themselves, the rest of the economic system was isolated, neglected, and suffered increasingly severe strains and failures. Furthermore, private-backed predatory lending exploited the vehicle of sub-prime mortgages and rapidly toxified a massive segment of the international financial system. Greenspan described these failures as resulting from "a flaw in the model... that defines how the world works." |
