Greenspan Admits He Was Wrong About Regulation

#27:

I'm afraid of the corporatism that is becoming embedded in this nation, too. It's, of course, what led to the rise of Mussolini.

But you even admit that we're socializing the losses of companies amongst the people. That's socialism. What to nationalize next? The auto industry? And then kinda eventually privatize it? What about the airline industry? And I predict the next is commercial credit cards. Bank of America, AMEX, Capital One----there's a ton of subprime lending in there (sans AMEX) that these guys are writing off right now. Wait until unemployment spikes and inflation rears its ugly head in the form of higher prices---then you'll have those go under since no one can pay for their CC and we buy that.

I disgress, but it's the point that we're socializing losses. The US is not a free market. It's a central economically planned one.

Free market capitalism is based on fixed capital that is traded through price mechanisms. To interfere with that process is to take away the "free" aspect.

While free-market capitalism is a great way for some lucky people to enrich themselves very effectively, it doesn't look out at all for people who work hard and live a fiscally disciplined life and yet somehow can never get ahead. I would wager that you wouldn't be quite so sanguine about the system if you'd had the misfortune to end up on the wrong side of the divide.

But you have faith in bureaucracy to take care of those who can't take care of themselves in a cost effective manner?

Isn't it pretty rare for Greenspan to admit he made a mistake?

Socialism is not the answer to the failures of a Free Market Capitalist system, rather it's the people (such as the Fed and the Bankers) who have corrupted the system.

It's better to go back to the Capitalist system brought as the Founding Father envisioned.

"I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms"

The "invisible hand" of the free market is, and has always been, GREED. It's far beyond time to wake up and smell the coffee.

Oh Chips, and on top of it all, you're a Patriots fan...

First, a clarification: the socialism in question here is of the contemporary German-French-Spanish variety, not the bloc of former Soviet countries. By my count, no countries with the former system have fallen recently. And the sort of ad-hoc "free markets" that you cite as sprouting in the fall of former Soviet countries is hardly a free market at all: it's a black market that arises out of necessity because people always need goods and services. So yes, it's always possible to vigorously capitalize on the misfortune of others.

The problem is that American socialism is for corporations, not people. These are the same corporations that push for putatively "free" market conditions, then get everyone so deeply mired in the muck that the government has no choice to intervene, lest things take a turn for the worst across the board. I would submit that we haven't seen the collapse of free market capitalism because we never had it in the first place.

Do keep in mind that we wouldn't still be monetizing new debt if the federal budget surplus that existed in 2000 hadn't been squandered.

While free-market capitalism is a great way for some lucky people to enrich themselves very effectively, it doesn't look out at all for people who work hard and live a fiscally disciplined life and yet somehow can never get ahead. I would wager that you wouldn't be quite so sanguine about the system if you'd had the misfortune to end up on the wrong side of the divide.

I'm all for the free market, but if the free market fails because of greed and self interest, then let it fail. What we have done is allowed the greedy guys to keep their personal wealth, yet fail at the free market itself. so now we are being forced to socialize their losses. Really royally sucks. I say let every single banker, hedge fund, etc who invested in these junk securities fail and close the doors, then pump money into the economy or setup new banks with the money and start over. This thing is going to drag out forever now and take countless lives and livelihoods with it, whereas one great catastrophic failure would be done and overwith more quickly and then recovery could begin. Yeah it would suck for a year or two, but this is going to suck for the next decade or more.

My advice is to forget the infatuation with the ideology, and try to think how can you live a normal life, like they do in Western Europe, with not having to worry if you'd be able to retire or not, with not having to worry if you'd be able to get health care without going bankrupt, and with not having to work no more than 40 hours a week and with having at least 5 weeks of vacation a year.

European socialism is an ideology, too. To say their living standards are superior to ours is a matter of taste and is subjective.

Health care is not a right. Working fewer than 40 hours is not a right. Five weeks vacation is not a right. It's nice, but it doesn't mean our country less humanistic. As socialist countries fall and make everyone poorer and you won't even have jobs to get 5 weeks vacation, you end up wealthier in various ways in the free market.

The problem is that the United States is more socialist than Europe. We socialize costs through debt monetization at an absurd pace. We have gigantic social programs---including our FREE HEALTHCARE we provide federally. We police the world to the tune of $1 trillion a year to "protect" everyone. We run the UN. We run the G7 and G8. The NWO makes us lose our sovereignty and gets us away from the free market.

Ideas change the world. To say that believing in ideas silly is paradoxical.

It's my belief that free-market capitalism enriches everyone's lives best.

D'OH!!!

#21,

Just ask yourself: why are you defending free market capitalism? Are you a CEO of something? Are you positive you will be able to buy your own health care and retirement?

I don't think so. You are defending it simply because you like the idea of it.

My advice is to forget the infatuation with the ideology, and try to think how can you live a normal life, like they do in Western Europe, with not having to worry if you'd be able to retire or not, with not having to worry if you'd be able to get health care without going bankrupt, and with not having to work no more than 40 hours a week and with having at least 5 weeks of vacation a year.

All of that is possible and is your right. And you haven't had any of it in your entire life in this country. And you are willing to throw it all away for your silly love for the ideology of free market capitalism.

And this guy was calling the shots? My dead dog could have done a better long term job then he did.

Never mind Greenspan personally. This proves that free market capitalism has failed.

This recession was caused by the Fed, which was established as part of the Federal Reserve Act, which is regulation.

It's regulation that has caused this. Greenspan has it all backward.

"I really thought that by letting them do whatever the hell they wanted that they would be sure to do the right thing," said Greenspan. "For my next trick I'm going to distribute six tons of rock at the next crackhead convention."

Never mind Greenspan personally. This proves that free market capitalism has failed.

It has now moved into a realm of ideology (if not a fetish). Sort of like anarchy: an idea that's good on paper but cannot work in practice due to the nature of human beings.

Corporations will not work for their own interest, because corporations are not people. People work for their own interests, regardless of how will that affect corporations. This is why we have banks going bankrupt while CEOs who led them make out like gangsters.

We need more government control of the markets, just like we need government control of the safety of our streets.

Wow... you never admin your wrong... never.

What Greenspan is saying is that the banks have backed themselves into a corner with derivatives and the population has been stripped of its wealth. Even though he knows this, he can't allow his train of thought to take the next logical step, which is, instead of giving the banks more money, give the money back to the population.

http://ewebsmith.com/Finance/therealproblem.html

http://ewebsmith.com/bus/taxpayers.html

Path: There are really a couple different issues there. It's completely possible for a bank to do responsible subprime lending. Verifying assets and income, clearly explaining rate changes, etc.

This is obviously old data, but I wasn't able to find anything better in a pinch.. in 2007, 8.5% of subprime loans defaulted. So it's not like every single subprime borrower is going down in flames. My understanding is that OCC banks have done better than non-OCC banks. That is, they were less likely to issue subprimes, and their default rates are lower (note that OCC banks are the same as CRA banks, if you've read any discussions on the effect or non-effect of the Community Reinvestment Act on the crisis).

And I can see wallstreet from my home here in Williamsburg

Good thing those mavericks McCain/Palin are all for de-regulation!

The Federal Reserve doesn't know shit.

It allowed banks, especially OCC chartered banks to sell subprime products, to allow subprime to exist. Some state governments fought against subprime lending and lost. Subprime, and mortgages that allowed borrowers not to provide prove of income, and repayment ability, was a road to disaster. That's the power of Federal Reserve.

Greenspan, who has spent a lifetime kissing the memory of the feet of dominatrix Ayn Rand, has finally figured out that greed is not good? Greed is always about "me" not "us" and is not the way a company should run.

Once upon a time, people who ran companies thought about their companies being around for a hundred years. Now they don't care if the Earth blows up after they are gone because they won't be here. Selfish, stupid pricks that deserve the best that the French Revolution had to offer.

Wow, um, yeah, sorry about that...hey, this isn't going to be awkward or anything when I see you guys at the old white dude club later this weekend, right? Guys?

Blasphemer! Infidel! Apostate! Goody Greenspan is a SOCIALIST!!!

(The bewitched Think twice proceeds to convulse violently on the courtroom floor).

Sarcasm: Off

I can just picture my old Finance professors running around in their brains like headless chickens as they're second guessing every bit of "gospel" they were preaching from the infallible "Pope Prospero" up there.

Steven: Exactly. It's pretty easy to admit you're wrong when you have nothing to lose.

However I do have to admit feeling some schadenfreude at seeing an Ayn Rand acolyte admit that the free market isn't the magical jewel of perfection that they've made it out to be.

Lacky

All this greed is just about "keepin' up with the jones's." Doesn't matter if you're upper, middle or lower class.

Americans need a new family to keep up with. One that lives within their means, looks for bargains, and saves their money instead of spending it on things they don't need. If that family was the role model, we wouldn't be in this mess right now.

he didn't notice the rich and CEO's got obscenely rich and the poor stayed the same.

and take your horse face spouse with you.

During his tenure Enron, Arthur Anderson, Tyco and Worldcom all went under. I find it hard to believe that he would think that companies would operate to preserve their self interests when really the only interest is maximizing profit for executives.

I screwed up, but I don't care because I'm not the Federal Reserve chairman anymore. Like Ben handle the problems now.

"I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”



How many recessions did we have over the last "40 years"?

Apparently Greenspan never rode the subway nor went to any downtown bars with the wallstreeters to overhear the depth of their greed and arrogance. I am not a bit shocked that they only cared about themselves and their bonuses. Man that I worked around only stayed in the biz a couple years and took their millions ad moved out west or out of the country to live on for the rest of their lives.

"my bad"