Greenspan admits he 'made a mistake'

feedingfrenzyOctober 23, 2008

He thought he could trust free markets to regulate themselves without government oversight.

Turns out he was wrong.

In testimony today before the House Committee on Oversight and Government Reform, this disciple of Ayn Rand and ardent proponent of deregulation during his 18-year tenure as Federal Reserve chairman said:

"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."

So now he's in "a state of shocked disbelief" about the financial meltdown. I guess that's what happens when someone so powerful finds his lifelong ideology colliding with the real world.

Sad for him, but so much sadder for the countless Americans who have lost their jobs, had their houses foreclosed and seen their retirement savings melt away before their eyes.

And that's not the worst of it. According to Greenspan, he "cannot see how we will avoid a significant rise in layoffs and unemployment," as well as a decline in consumer spending which will last until home prices stabilize, and who knows when that will be?

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logic

feeding frenzy: "So now he's in "a state of shocked disbelief" about the financial meltdown. I guess that's what happens when someone so powerful finds his lifelong ideology colliding with the real world."

Well said!

    Bookmark   October 23, 2008 at 7:49PM
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jkom51

Chris Cox of the SEC made even bigger and more costly mistakes - and he didn't even participate in the big bonuses Wall St. got, LOL.

So have we finally learned our lesson that de-regulation is NOT the end-all, be-all that was promised? We have sufficiently good laws, maybe even too many of them - all we need to do is actually enforce them! Cox had every right to investigate the CDS market if he had chosen to do so, and could have pushed for greater transparency. But he deliberately left key positions vacant (which they still are, four years later).

    Bookmark   October 24, 2008 at 1:17PM
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logic

A close relative who works as an analyst says that Chris Cox is an idiot.

    Bookmark   October 24, 2008 at 3:21PM
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marge727

The vacant positions that occurred during the last 8 years in many regulatory agencies--OSHA,FDA, etc. actually worked to de-regulate. When you are short staffed--you cannot check & issue penalties. Thats de-regulation, and partly why we end up with tainted dog food and baby formula.

    Bookmark   October 25, 2008 at 12:12AM
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haus_proud

There is lots of other de facto deregulation that has taken place under the radar screen in the past 7.5 years. When you have an administration that is ideologically opposed to government doing what it does best, and say instead that government does not do these things well, you produce a self-fulfilling prophecy by deliberately underfunding programs you're opposed to, even though they were authorized by Congress, or you hire incompetent individuals to run those agencies.

The Katrina debacle is perhaps the most egregious example of this ideology in full operation.

    Bookmark   October 25, 2008 at 10:36AM
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