|a nomad in search of...|
Jan 9, 2009
Alan Greenspan Concedes Being WrongI "Stumble Upon" Ivan Krstic's blog site and read about Rep. Henry Waxman's interrogation of former Fed Reserve chairman Alan Greenspan before the House Oversight and Government Reform Committee regarding the latter's culpability in the very recent US mortgage meltdown:
Greenspan: Uncritical acceptance of credit ratings by purchasers of these toxic assets has led to huge losses...This modern risk management paradigm held sway for decades. The whole intellectual edifice, however, collapsed in the summer of last year...
I made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such is that they were best capable of protecting their own shareholders and their equity in the firms.
I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.
Greenspan: Precisely. That's precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.
Thought Bubble: Here he is, THE Alan Greenspan, who for 18 years took on the reigns of the formidable Federal Reserve until he stepped down 3 years ago. It was even regarded in some circles that he was more powerful than the US president himself (if he jacks up interest rates in an economic crisis during an election year, whoever the incumbent president is, can start looking for another day job). The sheer size of his attaché case during a congressional hearing causes the Dow Jones to spike unpredictably. He was the economic sage of an era where market analysts salivate in anticipation of words yet to come out of his mouth. People in high places find vindication by quoting him. Bob Woodward wrote a book about him and venerated him as the "Maestro".
Now, a former-deity who walks among men...admitting he was wrong...that his assumptions while holding one of the most powerful office in the global arena... were essentially flawed.
--- TheLoneRiderComments? Email email@example.com
(Jan 9, 2009) i find that he is an even greater man for admitting that he was wrong :).