I saw the video of Greenspan last night. Iím glad he is able to see the flaws in his assumptions Ė especially for someone who has held a such firm belief in the free market for so long (and indeed, was essentially the poster child for it), itís really impressive that he is able to admit that he was wrong.
Iíve never really understood people who believe so strongly in the power of the free market (U of C, Iím looking at you). Individuals in a system generally are most likely to act in their own self-interest (which sometimes corresponds to the best interests of shareholders and/or broader society and sometimes not), and if there is no regulation at the individual or the system level, what results is something like what has happened in the recent mortgage crisis.
Unspecific and rather vague pronouncements are so easy to make...
The happy business of unregulated markets is over.
The markets have never been unregulated. Although I would agree that an era of overly loose regulation and extremely poor oversight MAY now be over.
In this period of extreme uncertainty I think it's premature to predict anything. But I would definitely bet that free-market capitalism is not going anywhere.
And by the way - Greenspan was just putting on a show for lawmakers. He is not shocked at all at what happened. He's a free-market fundie. He knows that just because a market is free it doesn't mean that every actor in the market manages risk correctly. Those that don't evaluate risk correctly die (which, btw, is exactly what we didn't let happen).
But Greenspan knows that right now what lawmakers and the public want to hear is a slap on the wrist of free-market fundamentalism. So he put on a show.
It really is the last days of Coolidge. Ushering in the Neodeal after dismantling the New Deal. Wanton greed, bad lending and borrowing. It's always the same.The Republicans are always decades behind in their thinking.
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