Alan Greenspan and the Economy

“Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.” Alan Greenspan, former Federal Reserve Chairsman, 2004

“A critical pillar to market competition and free markets did break down.
I still do not know why it happened?”

Alan Greenspan, the Oracle, never really understood what he was talking about when it came to the economy. Greenspan was so consumed with his own self-importance he overlooked the most basic fundementals of a healthy economy, and helped create the current melt down on Wall Street that has now spread throughout the world. Amazingly, Congress was so enamored with Greenspan they rarely questioned him. And yet, those entrusted to protect our Country…did not. Where is the accountablity?
On October 9, 2008 Peter S. Goodman reported in the New York Times: “George Soros, the pominent financier, avoids using the financial contracts known as derivatives “because we really don’t understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, desicribed derivatives as potential “hydrogen bombs.” And, Warren Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
Amazingly, one prominent financial figure has long thought otherwise. And, his views use to be held in the highest regard in debates about the regulation and use of derivatives that he refered to as “exotic contracts” that promised to protect investors from losses, thereby stimulating riskier practices that led to the current financial crisis.
Even more amazingly, on October 23, 2008, Greenspan denied before Congress that the nation’s economic crisis was his fault, but conceded that the meltdown had revealed a flaw in a lifetime of economic thinking and left him in a “state of shocked disbelief.” Greenspan was unable to defend his resistance to recommendations to use the Fed’s power to crack down on sub-prime mortgages, and opposing efforts to impose regulations on derivatives (the complex financial instrument that include credit default swaps – that figured in prominently in the current crisis).
On October 23, 2008 Greenspan was asked by the House Oversight Committee Chairman Henry Waxman, after pointing out that Greenspan had contributed to irresponsible lending practices by rejecting appeals that the Fed intervene to regulate a surging sub-prime mortgage industry and also noted that the list of regulatory mistakes and misjudgments was long … asked Greenspan, “My question to you is simple, were you wrong?” To which Greenspan replied,”Well, partially” And then Greenspan went on to blame overeager investors who did not stop to think about risks. My question is ,”why didn’t Greenspan, the Federal Reserve Chairman, stop to think about risks?” Where is the accountability?