What do Alan Greenspan and the Easter Bunny have in common?

I thought that Alan Greenspan was infallible. Wasn’t that the conventional wisdom all these years? For most of the political and journalistic power elite, this is the equivalent of finding out there is no Santa Claus.

on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.

Shocked like Capt. Renault, perhaps? I mean, shouldn’t someone with Greenspan’s credentials have known better than to trust the pyramid scheme that the finance industry created.

At least he is now agreeing that “the multitrillion-dollar market for credit default swaps, instruments originally created to insure bond investors against the risk of default, needed to be restrained.”

“This modern risk-management paradigm held sway for decades,” he said. “The
whole intellectual edifice, however, collapsed in the summer of last year.”

Author: hankkalet

Hank Kalet is a poet and freelance journalist. He is the economic needs reporter for NJ Spotlight, teaches journalism at Rutgers University and writing at Middlesex County College and Brookdale Community College. He writes a semi-monthly column for the Progressive Populist. He is a lifelong fan of the New York Mets and New York Knicks, drinks too much coffee and attends as many Bruce Springsteen concerts as his meager finances will allow. He lives in South Brunswick with his wife Annie. View all posts by hankkalet