There it is in the mid-day, NY Times ‘Breaking News’ feed:
“Facing a firing line of questions from Washington lawmakers, Alan Greenspan, the former Federal Reserve chairman once considered the infallible maestro of the financial system, admitted on Thursday that he ‘made a mistake’ in trusting that free markets could regulate themselves without government oversight.”
Now he tells us!
Greenspan’s mea culpa testimony went on to say that, well, maybe he was only ‘partially wrong’ during his 18-year tenure as Chief Honcho of the Fed, not to regulate our old friends, those pesky credit default swaps that nobody except a few math geeks really understand. Oh, those things.
OK, so nobody’s perfect. But, when I screw up, clients lose when they should have won and money gets moved from pocket to pocket – as one old trial lawyer put it: ‘That’s what God created Appellate Courts for.’ But, when Alan The-All-Knowing screws up . . . economies all over the world melt down and I am afraid the consequences will continue to be revealed over the coming months, dare I say years (?), in climbing unemployment figures, mammoth bankruptcies, foreclosures all over the place, mind-bending deficits, mortgage pools which defy valuation and debts which cannot be repaid. Let’s hope that’s all there is in the pipeline headed our way.
According to the Times, Greenspan snapped back at Henry Waxman’s aggressive questioning: “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms.” Nice. In the middle of finally getting around to admitting his own mistakes, he passes the blame to everybody else.
Playing the Blame Game is as American as apple pie and baseball. First comes the disaster, crisis, tragedy or what have you. Then, as the smoke clears, let’s find the really blameworthy ones and make the appropriate public spectacle – the media ‘perp walk.’ Kind of like the game some of us played as kids: Pin the Tail on the Donkey, or Wonderball, where you pass the ball around and the one who has it when the music stops is out.
Greenspan’s revelations continued. “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact,” he lamented, “I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.” What’s the “It,” you say? Greenspan’s ‘free-market ideology,’ according to his testimony, has revealed a hidden flaw leaving banks and other financial institutions unable to regulate themselves, resulting in the former Fed Chairman feeling, in his words (not mine) “a state of shocked disbelief.”
Could the hidden flaw be something as simple as pure, piggish greed? Is that really news – that people, left to their own devices, are greedy?
That is for the history books and pundits and talking heads to tell us about as they sift through the wreckage. For now, it’s back to the drawing boards in the wake of Greenspan’s revealing testimony today.