Wednesday, October 14, 2009
[This will be the last stroll down memory lane as our extended vacation will come to an end today, things returning to normal around here starting tomorrow. What better way to end this retrospective than with this item from September 15, 2008 when the former Fed chairman looked back at what he hath wrought.]
He keeps popping up, so it's probably not a bad idea to offer up a few comments here since George Stephanopoulos, at least, seems to remain blithely unaware that he's actually talking to a former arsonist as well as a firefighter, as Dean Baker opined yesterday.
The host of ABC's This Week gushes during the introduction:
For more on this we are now joined by the man who knows more about these problems than just about anyone else in the country, former chairman of the Federal Reserve, Alan Greenspan.In retrospect, we would all be much better off right now if he'd known more about a few "potential" problems five or six years ago, rather than keeping the gas pedal pegged to the floorboard while looking the other way as all sorts of mischief began on Wall Street.
Looking back, maybe all that energy spent heaping praise on "financial innovation" and the "diversification of risk" - that same "innovation" and "diversification" that now seem to have brought the world just past the point where Wile E. Coyote realizes there is no ground beneath his feet - might have been better spent mustering just a small bit of skepticism.
The whole country believed there was such a thing as "a free lunch".
Now it turns out there isn't.
The former Fed chief once again identified home price stability as the key to financial market stability, an argument that could also have been made back when home prices were going up as fast as they are now going down.
That is, when everyone was growing rich beyond their wildest dreams without even breaking a sweat, simply because they owned a home.
Americans turned to their equally-rich neighbors and said, "What a country!"
Today, they are saying the same thing, but with a decidedly different tone.
His best guess for home prices leveling off is early-2009, so, anyone thinking about making a home purchase should adjust their buying plans accordingly (i.e., wait until late-2009 at least, since, over the past six years, the former Fed chairman is batting about 0-for-1,000 in his housing market predictions).
It is truly amazing the amount of hubris that is still in this man given what now lies in his wake. In his own revisionist history, he portrays himself as something of an innocent bystander, helpless to effect change at the time, yet lending a hand as best he can now.
While not entirely to blame for what is unfolding, he was a very big cog in the machine.
It is also truly amazing that so many in the media continue to be incapable of connecting some very large, simple dots over the last 25 years.