October 24, 2008
When he stepped down as Fed chairman less than three years ago, Congress treated Greenspan as an oracle, one of the great economic statesmen of all time. Thursday, many members of the oversight committee treated him as a hostile witness. WP
Waxman: “In other words, you found that your view of the world, your ideology, was not right, it was not working”
Greenspan: “Absolutely, precisely. You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
During yesterday’s Q&A Session Greenspan initially looked like was going to try and avoid the tough questions. However, after being interrupted and prodded to answer, Mr. Greenspan reluctantly admitted he was wrong…about everything. Unfortunately, it looks like we will have to wait for a more complete apology.
"I still do not understand exactly how it happened"
Well, Mr. Greenspan, let me refresh your memory: for nearly 20-years you were the world’s most important financial regulator but you never felt the need to seriously regulate. Instead you allowed the financial markets to run wild, never once showing concern as the unregulated derivatives markets grew many times larger than the entire world economy. To add insult to these failings, during your tenure whenever the good times started to turn bad you did everything possible to cushion the fall, thus deeply contradicting your theory that the markets are best left alone.
Greenspan, once viewed as the infallible architect of U.S. prosperity, called the current financial crisis a "once-in-a-century credit tsunami" and said that he remained "in a state of shocked disbelief" that banks and investment firms did not do a better job of analyzing the risks...
The 1987 crash was a once-in-a-century crash, LTCM was a hundred year flood, the 2000-2002 stock market meltdown was unprecedented, the great U.S. housing bust continues, and now here comes the ‘once-in-a-century credit tsunami’? The only think shocking is how frequently Greenspan is permitted to unleash his asinine ‘hundred year!’ ramblings without being slapped. Your 18-year tenure was largely to blame Sir Alan! Apologize and retire already.