Thursday, October 23, 2008

Not making this up

I'm sitting in a cheap motel room in College Station, TX, and cooling my heels before an art auction tonight followed by a dinner for community activists. Tomorrow is an all-day affair for the same community activists and representatives of assorted public and private funding agencies. This is all part of a scheme some friends and I have for our tiny town.

Community organizer, moi? Who knew?

And now I read that ole Al Greenspan has said he was pretty much just wrong about some basic economic stuff like regulating markets and regulating derivatives. Greenspan was wrong. He told congress he was wrong. He said his economic theories were not in congruence with the realities of our financial markets. Reuters reports:
"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity -- myself especially -- are in a state of shocked disbelief," said Greenspan, who stepped down from the Fed in 2006.
The NY Times reports:
Although he defended the use of derivatives in general, Mr. Greenspan, who left his post in 2006, told members of the House Committee on Oversight and Government Reform that he was “partially” wrong in not having tried to regulate the market for credit-default swaps.
Well, partially wrong is something, right?

The Times article goes on:

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.

“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
$2 trillion evaporates from Americans' retirement accounts in 15 months, and Al's very distressed about his world-view.

That's precisely the trouble with an ideologue, and exactly why we need a pragmatist administration

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