Greenspan Says That His Free-Market Ideology Was Flawed

Here’s something that probably doesn’t happen too often. Former Federal Reserve chairman Alan Greenspan had a crappier day than you did. He had to admit before our federal government that his free-market, anti-regulation ideology was “flawed.” Ouch.

From Bloomberg:

“Yes, I found a flaw,” Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. “That is precisely the reason I was shocked because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

The admission that free markets have their faults was a shift for the former Fed chairman who declared in a May 2005 speech that “private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.”

Today Committee Chairman Henry Waxman, a California Democrat, said Greenspan had “the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis.”

“You were advised to do so by many others,” he told Greenspan. “And now our whole economy is paying the price.”

Waxman and other lawmakers repeatedly interrupted Greenspan as he answered their questions, in contrast to deference to his testimony while he was Fed chairman.

Greenspan then claimed that the Fed had no idea how large the subprime mortgage market had become until late 2005, says Bloomberg.

Greenspan Concedes to `Flaw’ in His Market Ideology (Update2) [Bloomberg]

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  1. ViperBorg says:

    Ah. Someone actually taking blame. He’s gonna need a bullet-proof vest.

    • Pixelantes Anonymous says:

      @ViperBorg: He’s at a position now where he can’t be held accountable any more, so where’s the harm really.

      This has been the pattern in this country for the last 20 years or so.

      • Red_Flag says:

        @ViperBorg, @Pixelantes Anonymous: Maybe he’ll just write a tell-all book and make money off his “confessions” and “insights” into the mess.

      • Bladefist says:

        @Pixelantes Anonymous: I don’t believe someone lives their whole life believing in something, then all of a sudden, changes their mind, because a bubble bursts. Bubbles bursts every few years. I’m going to put my tin foil hat on for a moment, and say, he was asked to take the fall for this, and for some reason, he did. I refuse to believe he flip-flopped on this.

        • m4ximusprim3 says:

          @Bladefist: Free levitra for life card?

        • humphrmi says:

          @Bladefist: To be fair, in his testimony he was contrite about a very specific part of free market self-regulation that he mis-read. He didn’t actually say that his or anyone else’s free market ideas are flawed. What he said was, that his assumptions that the market would self-regulate based on a long-term profit motive and fiduciary responsibility to shareholders was flawed. And he hit the nail on the head … companies took too much risk, because the short-term profits outweighed the risk of long-term losses. So he’s not exactly flip-flopping on a lifelong belief in free-markets, he’s just saying that this little bit of it (short vs. long term profit/risk) needs to be better regulated.

          In that sense, his testimony will also serve a much greater purpose than just him taking a fall… despite this mess, he is still a highly regarded free-market proponent. His effective recommendation of a specific instance of government regulation will help get that regulation passed in what is still a very free-market leaning country.

          • papahoth says:

            @humphrmi: And this is something that any clear reading of Adam Smith would mean you should not be surprised. But Adam Smith if frequently misquoted or understood by those that have not actually read Adam Smith. Perhaps this is based on his Ayn Rand nonsense.

        • Wormfather is Wormfather says:

          @Bladefist: Oh he flipped, but the evidence is tremendous that there was a small but fatal flaw in his thinking (which I still subcribe to…to an extent)

          Greenspan treated buisness entities like human entities, thus his belief that survival instinct would prevent them from making cataclismic decisions. Years ago, this was true but between (god I hate this word) greed and hurd mentality, that’s been slowly erroded.

          The problem now is, that the buisness entity survival takes a back seat to the human who unfornatly isnt “a cool hand at the tiller”. Calamaty happened because a. it’s is actually hard not to jump off a bridge when all your CEO friends are doing it and screaming that the water is fine. b. lets take Chuck Prince, former CEO of Citi for instance, not a bad guy, pretty smart, but his own survival was more important then Citi’s which is why he had no choice but to jump into the dirivitives/subprime/accidently killing a hooker in a hotel room only to have to call the Corleone family for help then getting a smug look from Tom Hayden fray.

          In conclusion a better theory would be not to do buisness with Italian mobsters.

          (not edited for spelling, sorry)

          • Tmoney02 says:

            @Wormfather is Wormfather: You nailed it. Greenspan believed that a company wouldn’t intentionally do harm to itself (especially potentially suicidal actions) and would always act in its best interest.

            Unfortunately the actions of many companies today especially those in the finance industry have shown this not to be true. at least not true anymore.

            The real question is how do you prevent companies from acting with reckless disregard for their lives while also encouraging them to take risks, sometimes calculated big risks?

  2. laserjobs says:

    I want to see his bank accounts and trading accounts. This guy is full of shit, he knew what he was doing all along.

    • craptastico says:

      while acting as fed chairman, his accounts were in a blind trust, and he was not able to make his own investment decisions as it would be a conflict of interests

    • CaliforniaCajun says:

      @laserjobs: No, I don’t think Greenspan had his hands in anything.

      I think he believes in an Ayn Rand style world where all the elite capitalists are high-minded and work so hard because it’s part of their moral fabric. For them it’s not about the money so much as the high minded ideals of working hard and getting what they deserve. A world where greed came from the lowlifes who didn’t want to work for a living.

      In other words, Greenspan has the worldview of a teenager dumb enough to be impressed by unrealistic schlock like “Atlas Shrugs”.

      Incredibly smart about markets. Not so smart about humans and their greed. That’s Alan Greenspan.

      • DarkKnightShyamalan says:

        @CaliforniaCajun: On the other hand, he probably does know that the title is actually Atlas Shrugged.

      • sleze69 says:

        @CaliforniaCajun: I think he believes in an Ayn Rand style world where all the elite capitalists are high-minded and work so hard because it’s part of their moral fabric. For them it’s not about the money so much as the high minded ideals of working hard and getting what they deserve. A world where greed came from the lowlifes who didn’t want to work for a living.

        Actually, had the market been allowed to crash, as told in Atlas Shrugged, the low-lifes who thought only about greed would have gone bankrupt and the adept businessmen WOULD have been able to take advantage of the undervalued mortgages.

        Just like you can cause a LOT of damage when you stop a surgeon in mid-surgery, the bailout is going to cause a LOT MORE damage than if we allowed the market to crash and heal itself. There would be some pain, but not as much and for not NEARLY as long as what we are about to face for the next decade.

        • CaliforniaCajun says:

          @sleze69: I don’t think we both have the same understanding of “crash”. To me, as told by my Grandfather, ‘crash’ means formerly middle-class families eating mustard sandwiches for dinner four times a week.

          Personally, I don’t favor that approach just so the greedy folks get their just desserts. And as a philosophy, objectivism is just like the book: old fiction.

          • sleze69 says:

            @CaliforniaCajun: To me, as told by my Grandfather, ‘crash’ means formerly middle-class families eating mustard sandwiches for dinner four times a week.

            That’s exactly what happened during the Great Depression when the government tried to fix the problem. That is why also why it lasted so long.

            If we were to let the stock market (and the housing market) bottom out, there will still be people with money (venture capitalists have been apparently unhurt by the current situation) who will see all the undervalued items just waiting to snatched up. These are the “moral” industrialists who produce.

            Just like in Atlas Shrugged, it would be a VERY shitty time while the market recovered, but it won’t be the mustard sandwich time of the olden days.

            • BrianDaBrain says:

              @sleze69: Thank you. I thought I was alone amongst Consumerist readers. I opposed the bailout for the exact same reason. Even the barest look at recessions of the past century show us that government interference with the market only prolongs a recession. When we get stupid with our money, the market must be allowed to fix itself. Getting even more stupid with our money (read: bailout) will never fix anything.

        • Wormfather is Wormfather says:

          @sleze69: I made this exact same argument when it came to AIG, there are other smaller insurance companies that played it right and they deserved to have the chance to watch AIG crumble and then buy off the little bits that interested them. Bailing out AIG is like survival of the fittest on meth.

          Imaging you give the fattest slowest wildabeast in the hurd a jet pack. Yes he survives the lions’ attacks, the rest of the hurd can continue to eat off his scraps. But at the end of the day, the entire hurd is slowed because of his mating and eventually his survival kills the hurd.

          /sucking at analogies.

      • theblackdog says:

        @CaliforniaCajun: Wait, I thought Ayn Rand was basically saying it was okay for a businessman to go into business simply for the purpose of making money for themselves. As I recall in Atlas Shrugged, Hank Rearden flat out says he came up with his metal to make money.

        • Wormfather is Wormfather says:

          @theblackdog: Damned right, I’ll do you one better…from Fransico’s Speech:

          “”If you ask me to name the proudest distinction of Americans, I would choose–because it contains all the others–the fact that they were the people who created the phrase ‘to make money.’ No other language or nation had ever used these words before; men had always thought of wealth as a static quantity–to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words ‘to make money’ hold the essence of human morality.”

          We’re getting awfully far from that these days, imo.

          Anyone who wants to read the entire speech: [www.capmag.com]

      • Wormfather is Wormfather says:

        @CaliforniaCajun: /bites tongue.

        I’m a big fan of objectivisim, so take this with a grain of salt but, you cant disregard the whole book on that notion. Yes there needs to be regulation but at the same time the essence of the book isnt that all buisness should be unfettered, yes, that’s an underlying theme, but the basis of the book is that you have to aknowlage and accept reality. With that being the guiding principle, Yesterday, Greenspan accepted the reality that completly unfetter capitalisim doesnt work in the long run.

        I could go on but this would get ugly.

  3. ShortBus says:

    Crappier day?

    I just closed a foreclosed house last week. Bought $13k worth of stuff on my credit cards to fix it up. Getting married next Friday…. and I was just laid off today.

    I’d rather be Alan Greenspan today. :-

    • m4ximusprim3 says:

      @ShortBus: Congratulations on your upcoming marriage!

    • mac-phisto says:

      @ShortBus: that sucks. on the bright side, you’ll have time to focus on what’s important – time with your new bride.

      lifehacker has a good post on what the laid-off computer engineer should do – open source work –> [lifehacker.com]

      now, if you’re not a computer engineer, that post may not seem relevant (although, if you read the first comment, you’ll see that even non-programmers can help open source projects), but i think the idea can be migrated – volunteer your time to network for a future position.

      good luck – i’ve been there (unemployed for 6 months ~6 yrs ago w/ NO unemployment compensation). don’t let the money get between you & your soon-to-be-spouse. i lost a great lover that way. =(

      • Wormfather is Wormfather says:

        @ShortBus: Dude, good luck man, I got married two weeks ago and I’m working out the budget to pay for the damned thing, dont know what I’d do in your posisiton. keep your head up this may just be an opporunity in disguise.

  4. uberbucket says:

    Is it too late to order an Alan Greenspan mask for Halloween?

    I love that picture – BOOGA BOOGA!!!

  5. Gopher bond says:

    Of course it’s flawed, there’s no such thing as a perfet market but I still don’t see how regulation is better than a well-diversified portfolio that manages risk.

  6. Red_Flag says:

    So Alan Greenspan is essentially saying that naked laissez-faire capitalism isn’t inherently nirvana?

    I feel somewhat… vindicated. Just a little.

    • Gopher bond says:

      @Red_Flag: Yeah, that’s always been a misconception of a free market, that’s it’s perfect with no risk of losing money or bankruptcies and it just keeps going up Up UP! The free market is a harsh teachers, gives the test first and the lessons later.

      • chrylis says:

        @testsicles: Those are exactly my sentimonies!

        Yes, this situation sucks, and some sort of failure is inevitable in any enterprise (even socialist!). The problem is that these banks pretty much knew (and were right) that they wouldn’t have to pay the price for failure. Private markets do regulate pretty well… but not when they know someone else is going to clean up their messes for them.

    • thinkliberty says:

      It’s do bad we have never lived under a free market in the US. Greenspan is responsible for artificially raising and lowering interest rates to manipulate the money supply.

      If he really believed in the free-market he would have shut down the federal reserve.

  7. Cycledoc says:

    A big duh moment. Friedman (Milton, that is) was also wrong!

    Greenspan, sadly, must be the last economist in the country to realize this and he was in charge for so may years. The repubs try to deflect everything to the democrats who do deserve some blame. But the philosophy was republican (Phil Gramm in charge); the congress was republican 1994-2006, and the presidency was republican. This was not a problem of being forced to loan money to people who could not repay, it was the problem of people being delighted to do so and setting up a giant ponzi scheme, taking profits and passing on risk to others. Amazing but true. Money makes people do funny things.

    • Tux the Penguin says:

      @Cycledoc: This whole house of cards is based on the fact that there were loans given to people who had no business getting them. Banks wouldn’t have normally loaned the money, but the CRA told them they had to. That was the base. If it had ended there, it would have been bad, but not nearly this level.

      What made it worse was when banks bundled these together and decided to sell them as what basically amounted to bonds. That was bad enough, but again, there was a multiplier that made everything worse.

      When Fannie and Freddie started buying and selling these bonds, which were getting AAA ratings even thought they shouldn’t have, many saw it as something it wasn’t. Then we factor in that banks and other institutions used them for asset requirements.

      Now, suddenly the payments at the bottom stop. It cascades up, suddenly the “bonds” aren’t worth as much, the level of assets drops for the holders, which means that they aren’t meeting their requirements as easily…

      I’ve heard what is happening best described as the flu. There is no cure, you just have to let the body work its way through and purge it. The markets will do just that, although seeing the open this morning, I think we’re seeing more panic than anything else.

      In short, what we had the government stick its nose into an industry in two places (CRA, Fannie & Freddie) which helped to make things worse. How bad would it have been under a truer free market? We won’t know, but if the government is going to do anything, one law and regulation would have fixed this:

      As a law, if the term is for longer than 5 years, the rate must be fixed. As a regulation, you must provide full documentation to get a loan, lenders cannot rely soley on FICO and credit reports.

      • mac-phisto says:

        @Tux the Penguin: that CRA crap is a cop-out. CRA does NOT supersede responsible lending guidelines. yes, banks are encouraged to work harder with less-fortunate individuals to get them financing, but it’s not a green light to hand the keys to the vault over to anyone who can sign a loan doc.

        if this were truly due to CRA, we’d see more community banks, savings banks & credit unions (who voluntarily implement CRA guidelines) at risk, but we don’t. this is almost entirely focused on the top tiers within the banking industry.

        this is 100% due to fraud on multiple levels within the particular institutions that have shown an excessive level of risk to the current market conditions. it’s originators that told “white lies” on applications, underwriters that manipulated the data to get approvals thru AUS, loan officers that ignored red flags, & then brokers that played the system to bundle the products on the market. & it was all greed-driven. every deal came with a waterfall of commission green for anyone that was party to the deal.

      • Grive says:

        @Tux the Penguin: Funny thing is, CRA-regulated businesses have been the ones who have fared all this better.

        It’s not the CRA’s fault, it has very little to do with it. Statistically, a CRA-regulated bank made less subprime loans, repackaged fewer loans, and got less defaults than other businesses.

  8. jonworld says:

    Even if they do put in regulations, banks won’t dare to go back to subprime loans and shady lending practices because of all the damage its’ done to them.

    • m4ximusprim3 says:

      @jonworld: You say this with such conviction. You really don’t think that in 15 years all of the 25 year old investment bankers who are in 4th grade now will learn the lessons of 2008?

      I wish I was as naive as you, but human nature contradicts your theory.

    • Brontide says:

      @jonworld: Of course they won’t… they will move on to another form of blatant speculation that they believe has no downsides.

      • OletheaEurystheus says:

        @snowmoon: exactly, I mean its not like this has been the ONLY time banks created one huge scam that got them profit at other expense. I mean christ it was only 20 years ago we had almost the EXACT same thing happen, albeit at a much smaller scale.

  9. darkryd says:

    deregulation equals more greed.

  10. Bladefist says:

    lol now we’re blaming Greenspan. Glad the democrats finally talked someone into taking the fall, and on their way down, blame the free market for the problem the government created.

    Here is an interesting article. [www.ldsmag.com]

    Why do I bother. I know we’re going to deny reality, blame capitalism to hasten the switch to socialism. Here comes trickle up poverty!

    • Red_Flag says:

      @Bladefist:

      I ask this in all earnestness: do you think that the President’s action of nationalizing the banks is a step toward socialism? Last time I checked, the Republican platform was all about getting government out of business, private property, free trade and all that.

      Nationalizing the banks, emergency or not, isn’t exactly a resounding endorsement of laissez-faire capitalism, is it?

    • Snarkysnake says:

      @Bladefist:

      I’ve seen this movie before. Remember 1992 ? of course you don’t,so I ‘ll refresh…

      Young bon vivant and governor of Arkansas Bill Clinton throws his hat into the ring for president. With a 80% plus approval rating,president Bush’s advisors dismiss the young dilletante as a minor annoyance on the way to a second term…(Many conservative commentators call Clinton a Socialist).

      Jan. 20,1993. Bill Clinton sworn in as 42nd president.One especially vocal critic (Rush Limbaugh) calls Clinton a sure fire one term laughingstock.Rumors that Clinton has a hammer and sickle tattoo on his backside remain just that,rumors.

      1993. Clinton proposes raising taxes for people making about what Limbaugh and his buds make. Hilarity ensures as Republicans try,but fail,to block the tax increase.Limbaugh makes his now infamous “million dollar bet” that the economy will tank and jobs will be vaporized.Many prominent Republicans publicly announce plans to flee the country for tax havens overseas.

      1994-Stupidly passing a retroactive tax increase and trying to have hysterectomies on demand for free,Clinton sees the congress return to Republican control. Many Democrats fear a wholesale gutting of several cabinet level departments in the Republicans cross hairs. A dark cloud looms over Washington’s gravy train lane where lobbyists cower in terror…

      1995- 1999 Economy booms. Socialism is delayed until the Republican adminstration of George W. Bush.

      So, was the wolf at the door then,or now ? I mean,Repubs call everyone to the left of Albert Speer a socialist (just like Speer did). Were you lying then or now? Do you see why no one trusts the most liberal Republican ever nominated ? If you are going to have Socialism,then I guess people want it run by a real Socialist…

    • Jabberkaty says:

      @Bladefist: Most excellent article. Thank you for sharing.

    • papahoth says:

      @Bladefist: This may all be true of Mac and Mae but they are just symptoms of the problem They did not cause this mess though the greed of the CEOs there certainly brought them to their doom. I think Phil Graham’s unwillingness to allow regulation of derivatives and other financial tools is really to blame. “Insuring” of risk without any requirements for capital. In fact I know that is why Bear-Sterns, Lehmann Brothers and AIG went south.

    • papahoth says:

      @Bladefist: I found some Republicans to tell you why you are wrong Alan Greenspan, Christopher Cox, and John Snow:

    • OletheaEurystheus says:

      @Bladefist: Oh good LORD this again. Blade you are the biggest neo-con apologetic broken record I have EVER met on the web. We have republicans ADMITTING now they where wrong, and your saying the liberals made them do it?

      How? By gunpoint?

      Your article was wrong a month ago when you posted a similar one written by a different pundant, and your new one IS wrong now.

      Christ even the republicans have admitted that the accusations that Fannie and Freddy where paying the dems was bullshit, the contributions broke down that while the democrats did receive more money from “contributers” they where WORKERS, and not members of the executive board with more vested stakes in letting their voices be heard by leaders… THOSE people, the leadership of those organizations who CAUSED this small part of the mess contributed to Republicans.

    • papahoth says:

      @Bladefist: Nice try an that article. “Orson Scott Card is primarily known as a best-selling science fiction author: he works in other genres as well and is also known as a critic, political writer, and speaker.” Yea, sounds like my kind of source.

      • Bladefist says:

        @papahoth: What was it again that you brought to the conversation. “nuh-uh” doesn’t cut it.

        • johnnya2 says:

          @Bladefist: This article has no basis in fact.
          Even if you take his belief that the crisis was started in the late 90′s, who was in charge of Congress then? The republicans had majorities in both houses for most of the 90′s and early 2000′s and did nothing. They made the rules, they set the agenda, they did nothing.
          I would also point out that the problems with this economy are not only in the financial sector, in fact that free credit program is what allowed most companies to continue their stupid ways. Most airlines decided to make others foot the bill for their failures by claiming bankruptcy. The auto industry in the US has been failing miserably for most of this decade due to no foresight and piss poor planning. EVERYBODY knew their would be an oil spike, and anybody who couldn’t see it would come during the presidency of two OIL MEN, were just not paying attention. There is also the republican love affair with free trade, which is not exactly free, it is hire disadvantaged people from countries where $1 a day is enough and say fuck it to people. It caused poisoned toys, and pet food and many other products which have no regulation. Thanks for making China the real super power.

          • econobiker says:

            @johnnya2: “It caused poisoned toys, and pet food and many other products which have no regulation.”

            I wonder if Alan Greenspan understands this freemarket capitalism?

    • BrianDaBrain says:

      @Bladefist: I hardly think you can blame the current state of the economy on one party or person. Too many factors contributed to it. The markers for this have been around far too long; long enough that people have been predicting this crash for well over a decade.

      Consider two of the causes:

      1) Clinton began encouraging lenders to lend to less-than-ideal applicants in order to get those people into houses. Granted, greedy companies took it far further than they should have, but there’s enough evidence out there that suggests Clinton’s suggestion popularized the practice. There are certain people out there who just don’t make enough money to afford houses at their current price. These people should never have been given mortgages.

      2) Outsourcing of jobs. Given that this saves money for big business, it’s no wonder that Bush and most of the rest of the Republican party backed this idea and even decided it would be cool to start rewarding companies for doing this. Trickle-down profits my ass. Even if greed didn’t keep people from trickling down the profits, it would matter little with a shrinking workforce.

      Anyway, two different causes, both parties involved. I think the point that the government is missing right now is that it’s a bit late for finger-pointing. Right now, only solutions matter; playing the blame game can come later.

      • Bladefist says:

        @BrianDaBrain: I have mixed feelings about that. On one hand, all the evidence points to 1 party. On the other hand, I imagine at least 1 republican was involved, which technically means, republicans we’re involved.

        Here is a pattern I have noticed. When it’s a republican failure, it’s republicans fault. When it’s a democrat failure, it’s a bi-partisan fault. Maybe as a democrat you don’t see it that way, but I see it. I see investigations when a republican is to blame (and I’m fine with that.) and I see a lack of interest when it involves democrats. The media has no interest and the democrat led congress just decides not to do any hearings.

        The scariest thing to me is, how one party can get away with _anything_. Republicans get away with nothing (which is good). You may hate what the republicans are doing (and i do too), but you KNOW about them. You know people are mad, you know people are fighting. With democrats, you have no clue whats going on behind the scenes. The media will cover it up.

        • OletheaEurystheus says:

          @Bladefist: The hell they will… we had a government investigation on a BLOWJOB by the republicans Blade… A BLOWJOB! And we still cant see any of the secret emails between republican officials that BY LAW where to be backed up and opened up to investigators. Do you realize how much money my workplace spends on having to follow email backup laws for government workplaces every year and the republicans got a FREE PASS to disregard it with the biggest bullshit excuse in the world that every IT manager I know couldnt beleive the press let them get away with.

          Both sides are sneaking covering up bastards. Dont you think for one second Republican can get away with nothing… because your sorely wrong.

          • mac-phisto says:

            @the pundits: maybe i should download that google app that disallows inebriated commenting, but i haven’t, so…

            seriously, are we really going to play this game? BOTH parties are rampant with corrupt, greedy do-nothings who won’t vote on anything that doesn’t 1) secure their position within their respective government office, 2) generate money for their campaigns or 3) get them a ride on the revolving door when their constituents give them the boot.

            i quote this entirely too often, but mark twain was right: there is no native criminal class except congress.

            consider this excerpt from a press release from the secretary of state of my state (CT) –

            As of October 15th the total number of registered voters in Connecticut is 2,021,749. The largest group of registered voters in Connecticut is unaffiliated, accounting for 845,311 voters. [emphasis added] There are 750,999 registered Democrats and 418,531 registered Republicans.

            pdf of press release here -> [www.sots.ct.gov]

            what’s my point? despite the fact that the parties have a minority in my state, they still get to maintain their stranglehold over politics. they get to run officials on every ballot in every town without so much as a petition, whereas an unaffiliated nominee has to file a series of applications an inch thick & collect as many as 7,500 signatures from qualified voters to appear on the ballot.

            ludicrous.

            we play right into their hands. they sit around & point fingers & we sit here & take sides. here’s a novel approach. for once, can we blame the lot of them? they all took their fair share of the blood money & say quietly in the corner while thieves raided our treasury & did NOTHING (in fact, they gave them the keys & helped them carry the cash out the front door). now we’re supposed to care who took more money & who took less? bullshit.

            we’re too smart for this. it’s time to take the parties out of the mix & start requiring that ALL candidates follow the same procedure to appear on the ballot. it’s time for us to say goodbye to party brands & elect officials that don’t allow a poker table full of special interest fat cats to decide what’s best for us all. take away the puppet masters & these politicians are exposed for what they truly are – swindling fools.

            well i, for one, am tired of the con. it’s time for change.

            (& if you live in CT, vote YES to call a constitutional convention this election day – it’s in your best interest –> [www.ctconcon.com])

            i apologize for the book. now, back to my don julio….

          • Bladefist says:

            @OletheaEurystheus: He wasnt in trouble for the blow job. He was in trouble for lying.

            @OletheaEurystheus: For the record I don’t read it that way. But even if I did, I wouldn’t support it. I don’t want the government telling me I cant own a gun to protect myself and my family. Korea doesn’t allow citizens to have guns, and every male has to be in the army (thus is capable of self defense), yet Korea remains a dangerous place. Must be nice to know you can rob anyone at gun point and the whole country is disarmed.

  11. Red_Flag says:

    I ask this in all earnestness: do you think that the President’s action of nationalizing the banks is a step toward socialism? Last time I checked, the Republican platform was all about getting government out of business, private property, free trade and all that.

    Nationalizing the banks, emergency or not, isn’t exactly a resounding endorsement of laissez-faire capitalism, is it?

    • Red_Flag says:

      @Red_Flag: That was meant to be a reply to Bladefist

    • Tux the Penguin says:

      @Red_Flag: Coming from me, I hate the idea that the government is getting the stock. But, as a limiter, at least its preferred.

      Preferred stock has no voting rights, so the government won’t have any built-in ability to influence (now, I don’t for a minute believe that these entities will actually ignore the government). And preferred stock is essentially a guarantee for dividends.

      The set up isn’t that bad if you want the banks to work out of it themselves: the banks get capital (preferred stock), the government gets promises of dividends and then the ability to later sell at a profit.

      Still, I think the whole thing is crap. And with this election, I have a feeling that people are willing to trade freedom for security… so, so sad.

  12. ElizabethD says:

    String ‘im up.

  13. panzerschreck1 says:

    lol.

    the irony of this is that some of you guys are blaming free market economics, when we do not practice a free market, and no one claims that we do. a mixed market economy is by no means free market. blaming the free market on a mixed market’s problems is purely rhetoric.

    its kind of like blaming santa for not getting you everything you wanted for christmas. its santa’s fault for pretening to exist by giving presents in the first place, but then its your parents fault for not being able to provide everything you could possibly desire.

    • panzerschreck1 says:

      @panzerschreck1:
      parents being the government’s hand, and santa being adam smith’s hand.

    • papahoth says:

      @panzerschreck1: what does this mean? you could not have possibly learned this in an economics class or book.

      • panzerschreck1 says:

        @papahoth: it means we’re blaming a problem that does exist on something that doesn’t exist beyond an imaginary or largely symbolic level, and then ignoring the other half of the story that compensates for the lack of backend for the former.

        free markets dont have fannie and freddy, they dont have as much excessive credit, and they certainly dont have government mandates that demand that every american own a house, or any other product for that matter. you simply cannot blame inherent greed in the free market for our problems when there are far more tangible and long-standing explainations that are the opposite of free market.

  14. Pious_Augustus says:

    Problem is, I new it since 2002/2003. I mean when Liberals back in 2002 where whining that no one would dare attack America or New York because it would sink the world’s eocnomy I said Islamofacism cares not about money there are those like Osama Bin Laden who live under a rock, two months latere 9/11 happenened.

    However, I date black women. For years, I have seen the same thing. How are all these women going to own homes but they don’t have jobs? Putting that you braid hair out of your home isn’t going to pay the bills.

    It’s crazy, and is he serious? You don’t know giving good loans to people who cannot pay it off or don’t deserve to have a loan in the first place a good idea?

  15. mythago says:

    I bet he was shocked, after all those years of being treated like the reincarnation of the God of Economic Theory. Now he’s just an old guy who did a bunch of stupid things that led to economic problems. Enjoy your legacy, Mr. Greenspan.

  16. Cycledoc says:

    No serious person believes Fannie and Fredy were the cause of the mortgage crisis. A contributing factor perhaps but not the cause.

    [thinkprogress.org]

    Lack of supervision of the kids in the playground, the ability to pass off risk and good old fashioned short term greed seem more likely.

    • Tux the Penguin says:

      @Cycledoc: Oh yes, reference a wacko-lefto blog for your backup. That’s like referencing Rush as well.

      • Tiber says:

        @Tux the Penguin: I’m sure calling his reference biased sounds like an actual argument, but it’s actually a logical fallacy. As much as I may think that, say, Bill O’ Reilly is a right wing nutjob, that does not automatically make everything he says completely false.

        For those who might still believe that Republican talking point, please see Wikipedia, as long as that’s not too biased for you. Pay particular attention to the “Enforcement” and “Relation to 2008 financial crisis” sections.

        • Bladefist says:

          @Tiber: O’reilly has a lot of left leaning beliefs, such as global warming. Ya, you’re right, thats really nutty.

          • Tiber says:

            @Bladefist: I listed him for the sake of making an example, and I stated that that was my personal opinion. I don’t exactly read up on his beliefs however, as I try to avoid Fox News and their pundits.

            Besides that, believe it or not, you can be on one side of the political spectrum, but still have issues in common with the other side.

            I am in favor of socialized medicine, want to scale back the size of the military, believe in increasing oversight in executive pay, want to tax the rich (but I am willing to put up with a tax increase on me as well), am not worried about illegal immigration, support gay marriage, and strongly believe in separation of church & state.

            However, I’m on the fence about gun rights, think that mankind’s role in global warming might be overstated (but still support environmentalism), and am not in favor of immediate withdrawal from Iraq.

            So, am I a liberal? ‘Cause I consider myself to be.

            • Bladefist says:

              @Tiber: Yea, and your opinions on gun rights is dangerous. That’s a constitutional right we have here, and nobody has the right to do anything about that. And the reason we can have guns, is to keep our government from controlling us. Thats way off topic. but ya, you’re a liberal, however your opinions on global warming is closer to common sense then most. I’m all for environmentalism as well.

              • OletheaEurystheus says:

                @Bladefist: Its a right that is forever warped by people like you.

                Last I looked our right to keep and bear arms also had that little nagging point of being part of a “well regulated militia.”

  17. TechnoDestructo says:

    Waxman: Do you think you were wrong about >such and such

    Greenspan: No, but let me finish, I was wrong about >such and such<.

    Never give him the answer he’s fishing for…never let HIM tell YOU you’re wrong…YOU tell HIM you were wrong. Weird.

  18. AtomicPlayboy says:

    Bad day will be Jan 20th, when a socialist-leaning know-nothing appointed by a reactionary electorate will pursue a mandate given to him by the likes of the free-market haters here (and in Congress) to impose a massive burden of regulation that will make SarbOx look like a company picnic.

    • Bladefist says:

      @AtomicPlayboy: They never blame the policies, just the people. If Obama failed to implement his liberal plans, in 2012 we’ll have a new hack,with the same plans, and a few new catch phrases, and people fainting at campaign speeches

    • 12-Inch Idongivafuck Sandwich says:

      @AtomicPlayboy: I agree, and that sucks. On the bright side, that should keep me employed for quite a while…

      /auditor & SOX guy

      • Ratty says:

        @12-Inch Idongivafuck Sandwich: Yeah really. I have my job watching for SOX compliance from the work of other people because we now need 3-4 people for a job one or possibly two could do. So maybe this will restore millions of lost jobs with regulation–or make life harder and work expectations more outlandish for those already enforcing existing regulatory laws.

        Not that i think there are very many people (out of work or otherwise) who would clamour over this, exactly.

    • papahoth says:

      @AtomicPlayboy: oh yea, lack of regulation had nothing to do with this. Yea right.

    • azntg says:

      @AtomicPlayboy: Bad day will be Jan 20th, when an ailing stalwart corporate puppet appointed by the rich and powerful elitists will pursue a mandate given to him by the likes of the “free-market lovers” here (and in Congress) to keep things the way they are, which will continue to make sure that social inequality will grow in conscious view and that the United States gets pushed to third-world status.

      It’s not that your original statement is totally wrong (aside from references to a non-existent “free market” in the United States.).

      It’s more like: “Whichever way we turn, we’re screwed.”

      • Tux the Penguin says:

        @azntg: Amen. Choosing the lessor of two evils is still choosing evil.

        At least if McCain is elected, we have a mixed government. That means less gets accomplished on the government level, which is usually a GOOD THING.

      • econobiker says:

        @azntg: Bad day will be Jan 20th when a business owned candidate supported by the journalism industry which limits reporting on any alternatives will be enrolled for more of the same…

        Come on guys, election insanity is voting for the same parties over and over again yet expecting a different governmental outcome.

        The journalism industry doesn’t report on other candidates and self-fulfills that these other candidates are not worth reporting on. Debates are controlled by a partisan organization run by prior heads of the Republican and Democratic parties…

        People who say that votes for an alternative political party is wasting your vote are usually from one of the two business owned parties….

        • sleze69 says:

          @econobiker: People who say that votes for an alternative political party is wasting your vote are usually from one of the two business owned parties….

          No. Until these other parties build up support at the lower levels (state senate, congress, governor, etc.) they are wasting their time running for president. I think only have 2 parties is bad for the country but until the other parties get their shit together (I think Libertarians are the closest), a vote for their presidential candidate is a wasted vote.

      • Ubik2501 says:

        @azntg: “Whoever wins, we lose.”

        And I unfortunately have to agree with that sentiment.

  19. TechnoDestructo says:

    I wasn’t watching the screen at the time, so I missed who was making the comparison to 9/11′s intelligence fuckups…I think it was Greenspan who responded that he did not want to respond.

    It’s probably even funnier if I’m wrong and it wasn’t him.

    I’m curious to see where that Christopher Cox guy ends up working after he leaves the SEC.

  20. losiek says:

    Greenspan’s plan:

    Let’s print some funny empty money. Lots of them.

    First, let’s hide them in housing market (fenomenal growth, buy, buy, buy), then in oil (OMG, barrel for $300 tomorrow, we are running out of oil, buy now before too late!), then hide them in stocks (15% “growth” every year). Then…. ZOMG, we run out of easy hiding places. Crap.

    Children, let me tell you what’s really coming. All these empty money are coming back into circulation now, while gubmint lowers the lending rates even more, thus printing mroe funny moeny. There will be nice inflation coming.

    The only thing saving us from a horrendous inflation now is fact that Eastern EU and other emerging markets got their markets messed up worse than us, and people from all over the world are actually buying US T-Bonds, thus removing funny paper from the market for some time. This will end though one day and we will pay Greenspan dollars in double digit inflation years.

    • MrEvil says:

      @losiek: Like I’ve been saying about these rediculously low interest rates as well as this nifty start the presses 700b bailout:

      It’s a good thing we have computers this day to count all the money or we’d have to start weighing it out at the grocery store just to buy a loaf of bread.

      That happened to my grandfather when he came of age in Germany back in the 20′s. When he collected his inheritance they weighed it because they couldn’t bother to count it and it was barely enough to buy a cigar.

  21. LiaCaepio says:

    I actually watched this on C-Span and it was very interesting, weird to say that though.

    Waxman came off as rude, John Mica was rude but hilarious. I think blame is to be put on both sides of the political spectrum, but certain glaring examples of ineptitude such as Barney Frank should not escape due criticism. One of the best lines was when Cox was under attack for his lack of action during this cricis in the last 3 years. One of the congressman, I forget the name, asked him “Where were you while this was happening.” His response, a not so subtle comment on Congress itself, “Right here with you”.

  22. Red_Eye says:

    What a shame he couldn’t have learned that deregulation and a free market didn’t work from say ohh California when they deregulated power and Enron screwed everyone. Instead Mr. HeadInSand Greenspan proceeded to push for the same thing that happened with power in CA in money in Wall Street. Brilliant!

  23. Anonymous says:

    Just for the record, the market isn’t free, and has never been.

    The US government has been heavily involved ever since the American Revolution.

    Tariffs? Subsidies? Licenses? Those are just two basic examples of how government manipulates the market.

    And if you think that the Republicans are better than the Democrats in keeping the government out of business–you’re wrong. That may have been _somewhat_ true some time in the _distant_ past, but they’re pandering for handouts just like the “liberals” are.

    Fight the power. Vote Libertarian.

  24. opsomath says:

    A fundamental principle comes out here: government can be bad, and industry can be bad, but government-industry hybrids can do truly ungodly things. Compare the pharmaceutical industry.

    The mortgage market as intruded into by Mae/Mac will probably be the textbook example of this in the future. And of course greed entered the picture, but probably no one would have thought they would get away with the whole “package horrible loans as securities and flip them, then retire to a sunny tropical island FAST” strategy without the perceived security of the government agencies.

    In a free market, individuals and corporations are primarily responsible for debt they incur. This is not true today.

  25. Urgleglurk says:

    Gee, if I made an epic fail like this at my job, I’d be fired and probably have several months of unemployment and belt-tightening. Will that happen to Greenspan?

    Nah.

  26. kingdom2000 says:

    I will never understand why politicians just don’t get that human nature has to be factored in.

    While greed is good, too much greed is destructive. Human nature is to always want more to the point of self destruction and the the free market is especially vunerable to this. Regulation doesn’t exist to stop greed , it must exist to stop the self destructive greed that always follows success.

    • SinisterMatt says:

      @kingdom2000:

      I think that this may have something to do with the control factor. They (and us) like to think that everything is under control, that the government is in control, etc. Human nature by default is unpredictable, so, since they can’t control it, they leave it out, to varying degrees of badness.

      Cheers!