Open Thread: Greenspan says “Not My Fault”
Here’s a laugher: “In a detailed review of the causes of the financial crisis, former Federal Reserve Chairman Alan Greenspan acknowledged a range of regulatory failures but strongly disputed the widely held view that the Fed left interest rates too low for too long.”
Oh, it gets even worse:
“In Mr. Greenspan’s 48-page review of the causes and consequences of the crisis, the text of which was released by Brookings, he acknowledged that the regulatory system failed, that Fed officials didn’t take seriously enough the risks building in the subprime mortgage market last decade, that regulators more broadly didn’t demand that banks hold enough capital and that he didn’t do enough to rein in “megabanks,” that posed a risk to the financial system.
He offered a full-throated defense of the interest-rate policies he championed. Low rates did play a role in spurring a housing bubble last decade, Mr. Greenspan said. But it wasn’t the short-term rates he controlled, he said. It was longer-term rates, which were driven lower by a flood of savings released by emerging markets into the global financial system.
The Fed pushed its benchmark interest rate—the federal-funds rate—to 1% in 2003, to fend off a dangerous bout of deflation. Some critics say this fueled adjustable-rate mortgage borrowing, bank risk-taking and the housing boom.
Mr. Greenspan says rates on 30-year fixed-rate mortgages drove the housing boom, not the overnight lending rates the Fed controls. Because of the flood of foreign capital, he said, longer-term rates became less closely linked to the federal-funds rate during the boom, something he described at the time as a “conundrum.”"
Discuss . . .
>
Source:
Greenspan Defends Low-Rate Policy
JON HILSENRATH
WSJ, MARCH 18, 2010
http://online.wsj.com/article/SB10001424052748704207504575129630378724708.html
Tweet
Facebook
Reddit
Digg this!
March 18th, 2010 at 8:00 pm
So, basically, it’s the foreigners’ fault.
Yup, that sounds like a good ole American response to me.
March 18th, 2010 at 8:02 pm
Interesting. While I agree it was irresponsible to leave rates so low in the face of such a blatant asset bubble, at the same time I find it hard to believe a change in the fed’s rate would have really made much of a difference.
I feel that the problems stemmed from the fact that mortgages were issued to people who couldn’t afford them at all, rather than the rate associated with such mortgages.
I apologize if this is an asinine question, but…who are the regulators in charge of deciding who can receive a mortgage and who can’t? Do the banks self impose restrictions or is the government involved? Those regulators were really the ones to blame. Had they done a better job the real estate bubble would not have been nearly as bad and instead all the foreign capital he mentioned would have just gone into equities and we would be having a repeat of 2000 instead of a very different, and much more dangerous, beast that we have now.
March 18th, 2010 at 8:21 pm
The dog ate his homework?
Anybody else notice the profuse Bernanke humility yesterday at the House Financial Committee hearing? Somebody sent him to PR charm school – he actually confessed that the FED may have missed a few things……..Duh!
March 18th, 2010 at 8:26 pm
As I said last time BUBBLES trotted out this lame argument one year ago…
http://www.ritholtz.com/blog/2009/03/greenspans-denial/
“His main thesis being that since he only controlled the fed funds rate, he had little influence on longer term rates which are directly correlated to mortgage rates …”
The absurdity of this defence is obvious just by looking at the current Fed response (buying ABS, buying MBS, loaning cheap funds to buyers of these assets, etc. ad nauseum).
So during the pathetically obvious bubble, why was not the Fed short-selling ABS, MBS, and providing unlimited funding to bearish speculators so that they could remain solvent in the face of such nonsense? The whole system was rigged for updside and Greenspan was a despicable cheerleader and traitor when he should have been a prudent central banker!
March 18th, 2010 at 8:33 pm
Saw this earlier. Couldn’t even muster the energy to read half of it before closing it and going onto something else. None of these clowns will ever admit their culpability but I will give Greenie credit – he comes the closest by at least ackowledging regulatory failures.
March 18th, 2010 at 8:53 pm
Audit the Fed. I remember those idiots on CNBC whenever the fed had a meeting. All their attention was on Greenspans briefcase.
March 18th, 2010 at 8:54 pm
What a clown. Post 9/11, they pulled out all the stops, telling everyone to go shopping, and while they were out there consuming it up, to also buy a house. The low interest rates had a lot to do with the RE bubble.
March 18th, 2010 at 8:54 pm
Nah, low short-term rates didn’t drive institutions into commodity index funds and MBSs. And demand for MBS supply didn’t help fuel the decline in quality. Also, it was fixed-rate mortages that created the problem not those short-term adjustable ones that featured those low, low, low “teaser” rates. Must be nice to be out of touch with reality or beyond caring.
March 18th, 2010 at 8:56 pm
What about Greenie openly advising people that ARM’s were a “good option” for many people? Remember that? The man is a total fraud.
March 18th, 2010 at 8:57 pm
“…Mr. Greenspan says rates on 30-year fixed-rate mortgages drove the housing boom, not the overnight lending rates the Fed controls. Because of the flood of foreign capital, he said, longer-term rates became less closely linked to the federal-funds rate during the boom, something he described at the time as a “conundrum.”
Actually, this is rather accurate in the sense of the “fuel” for the fire, but I don’t see any discussion of trade deficits and capital/current account imbalances. The linked WSJ article didn’t mention “trade” once. This looks like more of a political failure on the part of Washington to balance trade and the resultant capital flows. Everybody tends to look good in the depths of a credit binge, who wants to rock the boat?
March 18th, 2010 at 9:00 pm
The absurdity of this defence is obvious just by looking at the current Fed response (buying ABS, buying MBS, loaning cheap funds to buyers of these assets, etc. ad nauseum).
So during the pathetically obvious bubble, why was not the Fed short-selling ABS, MBS, and providing unlimited funding to bearish speculators so that they could remain solvent in the face of such nonsense? The whole system was rigged for updside and Greenspan was a despicable cheerleader and traitor when he should have been a prudent central banker!
March 18th, 2010 at 9:03 pm
I read through AG’s comments on another site and noticed that he traced the cause of the housing malinvestment problem back to the original source, the fall of the Gorbachev Administration.
At least he didn’t try to place the blame on the Falklands War in 1982.
Frankly, I do not think that his mental processes are fully functional.
March 18th, 2010 at 9:22 pm
Greenspan should take a vow of silence. He sold crack credit in the form of “free” FRNs for nothing to baby boomers to create bubble housing wealth which left their children on the curb forever…without even considering that those same boomers were schooled for next to nothing and again their children were saddled with six-figure college debt to escape first without the ability to declare bankruptcy before they could begin to buy a house of their own. In metallurgy, this would be considered vastly accelerated corrosion. Financial services has run out of tight holes to penetrate, the long soak is in full effect.
March 18th, 2010 at 9:42 pm
A feckless man who was caught up in the hubris of the times. Just throw money at the problem and everything will work out. “It’s different this time”. We don’t need the regulations from the past, those rules were for the depression era people. This is a new age. I recall listening to Greenspan during his speeches before the senate and everyone seemed either spellbound or confused by his wordspeak. He was not the only problem by any means, but he was front and center for quite a while. It seems that he would like history to look at his tenure in a kind way, but it’s not up to him.
March 18th, 2010 at 10:09 pm
There is plenty of blame to go around. Greenspan certainly bears some blame, but you guys are piling it on selectively. What would you have done differently post 9/11? Think carefully — God forbid, but our nation might be in a similar situation again….
March 18th, 2010 at 10:12 pm
Greenspan, please die!
The sooner you are gone , the better the world will be. I wish you were never born.
March 18th, 2010 at 10:12 pm
C’mon — its NOT INTEREST RATES.
We have ZERO systematic inflation. In fact, we have a continuing deflation problem. The crisis of 2008 was a deflation crisis! Commodities, real-estate and other prices dropped to 10-20 year lows a year ago.
We had rampant speculation in real estate. This is best controlled through the DOWN-PAYMENT mechanism. This would reduce leverage to housing and protect banking without using a blunt tool like interest rates.
This about it — if regulators would’ve just said… “we require you to receive 20% down for all mortgage loans”. This is the RIGHT solution to the problem.
Low low rates are the future.
March 18th, 2010 at 10:13 pm
Its very hard to solve future problems… when people dont even understand the past well.
March 18th, 2010 at 10:15 pm
I’ve seen this argument by Greenspan and his supporters, that the housing market bubble was mostly about long-term interest rates, not short term. Similarly, the argument by the stock market bulls back in the summer of 2007 was that subprime mortgages represented a relatively small portion of total mortgages outstanding.
But is it not the case that a large portion of the mortgages extended during the period 2004-2006 were tied to SHORT TERM interest rates? Prices are determined by buyers and sellers “on the margin”; the argument that mortgages which were tied to short-term rates represented only a small portion of total mortgages strikes me as specious.
********************************************************************************
Greenspan’s credo: “if you can’t dazzle them with brilliance, baffle them with bullshit”.
March 18th, 2010 at 10:15 pm
“It was longer-term rates, which were driven lower by a flood of savings released by emerging markets into the global financial system.”
This is like claiming an enemy dropped a bomb on our country, yet not admitting that we provided the funds to pay for the bomb, the funds to buy the plane, the funds to buy the bomb, the funds to hire the pilot, and the funds to pay for the training to get the job done. But honestly, it wasn’t our fault.
The only “excess savings” held by emerging markets was in the form of cheap dollars that had to either be converted to foreign bills, driving inflation overseas, or re-invested in U.S. bonds, driving the long rates low and holding them there. That’s what drove the disconnect when the long rates took so long to drop after the Fed had begun its campaign toward 1%. Before the long rates could follow, enough short-term dollars had to be borrowed and sent overseas by America consuming WalMartian quantities of UseLessStuff to fill both Atlantic and Pacific oceans with JunkOnDemand tankers burning kajillion gallons of used-t0-be-cheap oil in order to fulfill the obscene appetite of the American Over-Consurmer: Mr. Exceptional.
So in essence, that giant pile of UseLessStuff from WalMartian that ended in the garbage beside the remains of the U.S. economy is what drove the housing bubble.
Without junk, there would have been no emerging market “savings”. Without cheap interest, there would have been no borrowing, lying, and stealing to buy junk. So in truth, the driving force truly behind the collapse was not Alan Greenspan, but the American Credit Junkie.
And the fact that we have a shining city on a hill and deserve everlasting glory and fame, I acquit myself unanimously for all the junk I “needed” to buy at that time, and am also pretty certain it wasn’t your fault, either.
God bless us everyone.
March 18th, 2010 at 10:19 pm
What I don’t understand is why, now that Greenspan has been completely discredited, does anyone listen to or care about his views on anything?
WHy doesn’t he just quietly disappear to contemplate his naval in the arms of Ayn Rand?
March 18th, 2010 at 10:22 pm
My how The Maestro has fallen…
BR, if there’s one chief criminal in this whole mess it’s definitely Greenspan. But the point about low long-term interest rates is still valid given China’s FX policy and the raging animal spirits of the past two decades.
March 18th, 2010 at 10:29 pm
With the exception of infidelity, when was the last time that a U.S. official took personal responsibility for their actions? The USG is full of deniers, connivers and outright liars.
March 18th, 2010 at 10:32 pm
Greenspan should be hung up by his balls and die a long slow death. He’ll burn in hell for his crimes on humanity.
March 18th, 2010 at 10:33 pm
Barry –
We can blame the fed for the housing bubble and by any means I am not defending AG or the fed or any other knuckleheads in govt but he is correct the fed does NOT control mortgage rates. Sure they can buy 1.25T of mortgages and push rates down 1%+or-. I do not believe this was going on back then and certainly not anything of the magnitude we just had.
Did low fed funds rate cause people to borrow and speculate…absolutely, which possibly created more demand for crap MBS..sure.
So how can we say the fed keeping rates too low for too long created the housing bubble? If you say the fed was asleep as a regulator and should have stopped some of these crazy ass lending programs guilty as charged.
Maybe its just semantics buts lets burn someone at the cross for the right reasons.
This seems to the same ol story the sec, the fed, occ, or any other regulator you can think of is out gunned or in bed with the industry they are supposed to regulate. (except the FDIC)
This is a real issue to be upset over.
What say you?
March 18th, 2010 at 10:40 pm
DL has it right. The short term rates drove it all. ARM’s, Re-fi’s, etc….
March 18th, 2010 at 10:57 pm
Earlier today, from another site sent to my “addresees” this ridiculous comment by Greenspan, noting, that he is is probably they only man on this earth that would agree with his “assessment” (i.e.,DENIAL!)
Loved ESB’s comment, and PHILPA also has got the most sensible point…why does anyone even listen or read this feckless failure’s continued appearances/speeches!
March 18th, 2010 at 10:58 pm
Greenspan is a douche-bag, no doubt.
But I would ask politicians to take a good hard look as to why people need to use credit in their everyday life nowadays.
Greenspan was an agent of destruction, not the engine.
March 18th, 2010 at 11:05 pm
The obvious question here is, what about Bernanke?
The next bubble (somewhere) is not yet inevitable, although it is very probable.
March 18th, 2010 at 11:14 pm
The sleeping giant has moved on into a different phase of enchanted, disturbed sleep. This old man is not content with that and insists on wacking it with his walker. He is so deluded he thinks he is right in defending his reputation. This is yet more proof of his delusional state that many have accused him of but no one would believe. Even after the fact with most of the evidence in proving the damage done he still can not accept that he was wrong. He is delusional and getting high on his own bathwater
He does not realize that if he is able to do the impossible and wake the thing the sleeping giant will turn over and squash him like a bug. He should go quietly into the night with his mulligan
March 18th, 2010 at 11:15 pm
“Low rates did play a role in spurring a housing bubble” , harebrained consumer mentality, corporate avarice and sloth, and the disheveling of the concept of value “last decade,”
So did this…
“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.” – Greenexpand, 2/23/2004
“Look at them play in the bubble, Bee Bee! When they’re putting it all back together, I’ll have you speak of Green Shoots. Recovery will carry my name as if it were my baby, Bee Bee!”
March 18th, 2010 at 11:18 pm
Ironically, the delusional Mr. Greenspan is less inaccurate than “left”-Keynesians such as Dean Baker. Greenspan is willing to acknowledge that “easy money” played a role in the housing bubble as long as he can claim that it was somebody else’s doing. But the Keynesians don’t want to acknowledge that anybody’s easy money can do wrong, since their policy is one of easy money by all available means. The last two Dean Baker articles that I read blamed the economic crisis on the housing bubble, but were entirely silent on the causes of the housing bubble.
March 18th, 2010 at 11:26 pm
Everyone should watch PBS Frontline episode on Brooksley Born:
http://www.pbs.org/wgbh/pages/frontline/warning/
It implicates Summers, Rubin, and Greenspan, among others. It also shows a clip of Greenspan, humbled during the depths of the crisis, admitting his culpability in congressional testimony. Of course now he back-peddles.
March 19th, 2010 at 12:08 am
1. The Fed displaces the owners of capital and their right to seek risk adjusted returns, subverting “capitalism” by deciding what interest rates should be, rather than letting the owners of capital decide their own risk/reward.
2. If we are the largest economy on earth then our Fed dictates to a large degree the yields and returns internationally by deciding we are too stupid to choose what to do with our own money (capital).
2. International savings (all savings actually) aren’t “released” if they can seek a fair return without central bank subversion, which of course is lead by whom? OUR Fed. If WE decided what our risk/reward would be, does anyone think we would accept ZERO rates to banks? I think not. Would not insolvent banks be required to pay more for the risk involved in doing business with them? I think so.
3. Thus our central bank, ie: the FED, is responsible for flooding the system with all savings, not just “international savings”. As verification what was the U.S. savings rate while Greenspan was Fed Chair? Did we not have a negative savings rate? The reason of course, was because WE, the owners of said capital, couldn’t get a fair return in insured banks and so were forced, (as we are right now), to seek return via higher risk (like flipping houses and building all manner of bubbles) or worse, become mindless consumers rather than saving and building capital for the future. Why save if the Fed has engineered inflation into the system instead of fair yields?
Mr. Greenspan has his cart in front of his ass. He clearly doesn’t have a clue about economics or capitalism. We don’t have any capital! Capitalism requires capital(duh), ie: savings. If we had capital we wouldn’t have to borrow from every Tom, Dick and China.
These guys claim to be free market capitalists? Wouldn’t free markets include the freedom for the owners of capital to choose their own risk/reward instead of some appointed central bank bufoon?
March 19th, 2010 at 12:16 am
We allow the fed to create our money from thin air and deal it out for free to their member banks (currently we effectively pay them to take it). Whatever goes wrong with the Fed or the banks, short term or long, lands squarely on the Fed.
March 19th, 2010 at 12:36 am
Exactly. Rather than banks (or other borrowing/lending entities) paying the rightful owners of $$ a fair return, the fed steps in, prints more and lends in our name, devaluing our $$ and co-opting our right to control our own money and seek a return on savings of what should be a limited, and thus value holding, resource. So any blame for flooding the system with $$, international or domestic, lands squarely in the Fed’s lap.
If our $$ was an actual store of value, we wouldn’t tend to be rabid consumers and we wouldn’t have massive bubbles, we would have steady growth based on the store of our labor…savings, which used to be known as “capital”. As it is, why save? We know our money is going to be devalued and goods will take even more devalued dollars to buy in the future, so we are forced to use it now (or even borrow more) rather than save it and lose value and purchasing power.
And we wonder why so few have retirement savings? Are they insane, stupid or worse?
March 19th, 2010 at 12:37 am
Well put, farfetched, and we are back at that conundrum now, which means there WILL indeed be another bubble of epic, and even more disastrous, proportions because people are forced to speculate and chase yield with their dollars to get any kind of a return. It’s blowing right in front of our very eyes once again.
March 19th, 2010 at 12:40 am
@farfetched: “Are they insane, stupid or worse?”
All of the above.
Your rants really sparked another “ah-ha” moment for me. Thanks for that.
March 19th, 2010 at 12:41 am
History will not look kindly on our economists (and many other people in supposed exalted positions) when looking back at this time period.
March 19th, 2010 at 12:47 am
He does have a point that the largest currency manipulator by far is the Chinese government. Some part of this mess can be attributed to the Chinese willingness to make USD credit cheaper. They gave us a gun to shoot ourselves in the face. The Fed took advantage of the high end glut to keep rates lower (hey, free money!)
March 19th, 2010 at 12:52 am
Why didn’t he call for a restriction on foreign buying at that time or press more vehemently for yuan revaluation or free float? Stephen Roach begged for attention to be paid to the imbalances for years.
Also, he seems oblivious to the fact that there is another lever of government which can be used to stimulate: fiscal policy. Greenspan argues that we would have been doomed to permanent recession without a low fed funds target. What if instead we had a rise in domestic fiscal spending in order to address the stimulus requirement?
Do not the two bubbles of the Greenspan years suggest that public capital isn’t always more inefficient than private capital? The US needed and still needs to make major adjustments to globalization and environmental problems, and we have major wealth and income imbalances and demand insufficiently. Isn’t it possible that fiscal deficits instead of increased private leverage might be called for?
March 19th, 2010 at 1:39 am
The financial meltdown would not have been possible with out the bloated US trade deficit. Those dollars were recycled by creditors back in the US economy. (the “flood of foreign capital”)
Any reforms HAVE to focus on reducing the US trade deficit. I see NOTHING serious coming out of Washington about this, which is no surprise really since they have a lot to do with the de-industrialization and resultant hollowed out manufacturing shell that has taken place over the last 30-35 years.
As for lack of regulation, yes and no. There are and were more financial regulations than ever. It was the lack of enforcement of them that was the greater problem.
The nullification of Glass-Steagall not as big a deal as being made out since it doesn’t apply outside the US, and the meltdown was a global event. (although it originated in the US)
March 19th, 2010 at 4:12 am
The ones who attribute the failures of the real existing capitalism in the form how it has historically developed, e.g., the recurring financial crises or the grave social disparities, to character flaws or false thinking of individuals as main cause for these failures, although these individuals, like Greenspan, are merely “character masks” (Marx) in this social-economic system, who fulfill a certain social/economic function as capitalist, worker, or government bureaucrat, haven’t really understood how the capitalist system with its abstract functional relationships really works.
The question to ask is not who caused the boom and the following crash, the financial crisis. Instead, the question to ask is what caused it and will cause it again in the future, in whatever form it will play out next time.
So Greenspan is not wrong, when he says it wasn’t his fault, although he fulfilled his role as character mask and represents an ideology that is a symptom and part of the problem. Besides this, Greenspan should finally shut up, anyhow.
rc
March 19th, 2010 at 5:45 am
greenspan, one big spread sheet wonk
jim rogers just on bloomy, uhhh, get out in real world and see how it works
just different worldviews
lotsa good posts on this one
March 19th, 2010 at 5:50 am
Greenspan was clearly the Prime Architect of the FED standing in front of the all the prudent savers of Capital derived from the efforts of the People’s labor. The Maestro, AKA The Great Enabler of Crack FRNs,
induced a pan-creative cancer that brought down late-stage Capitalism, and since 2001, behind a curtain of Terror, addled as if by air -bubbles in the bloodstream.
March 19th, 2010 at 6:06 am
China does it a little differently. Maybe we should take a page out of their (little red) book:
http://jonathanturley.org/2010/03/18/non-stimulus-package-north-korea-claims-to-have-execute-top-finance-adviser/
March 19th, 2010 at 6:08 am
sorry, that was supposed to be North Korea (i’ll learn how to read soon).
March 19th, 2010 at 6:27 am
!@#$^!@^!^*I#W^U*%^*@&@$&*@&@$^#muthrQ@#$^#@^@#%^^&%@Q$%^ fu@#%^@&%&@&$Wcker@#%$^#@%&$!!!!!
That was not off topic.
March 19th, 2010 at 6:31 am
@rootless_cosmopolitan
I get it. The ol’ “Mistakes were made”, rhetorical flourish, eh.
I don’t just disagree with you. I’d like to say some things about you that BR would likely strike out.
Let’s just put it this way: your head is stuck in the sand or more likely in a part of your anatomy that only a pervert would love.
March 19th, 2010 at 7:34 am
BR: can you please enlighten me; how will raising the interest rate help cure a bubble that is confined to one sector (housing) and not advercely affect the rest of the economy especially in terms of jobs ? Raising the interest rate will affect all sectors not just the one you are trying to cool down. Hence I dont really see how Greenspan went wrong; he has a dual responsibility towards growth AND jobs. However the problem in my mind is that those two goals, often have conflicts of interest for achieving these.
March 19th, 2010 at 7:41 am
The problem was the Fed maintained a tight policy stance too long (cooling the rest of the economy) prior to dropping rates to 1%. They had to hit the gas too hard, too long. And yes, Option ARM products (much of the root problem in the housing bubble, not 30 year fixed mtgs) were fueled by low short term rates.
March 19th, 2010 at 7:47 am
There really is no such thing as “the FED”, or the “government”, or some other institutional name anymore than there is a GE or GM.
There are real people making horrific mistakes, ripping off the people, catering only to a select group of contributors, lying, cheating and stealing.
The entire scheme to obfuscate, hide, and bury the actions humans under a rubric of linguistic legerdemain should be exposed every time it occurs.
No “Mistakes were made” by the FED, they were made by men and women with names who hide behind the institution they work for, cowards all.
March 19th, 2010 at 8:04 am
I’m late to this party, but don’t forget how he gave cover to the last administrations tax cuts & deficts
March 19th, 2010 at 8:37 am
C’mon. Here were the causes -
1. Low down payments (this is the gasoline that fuels speculation)
2. Mortgage interest deduction (up to 1.1M in mortgage… even on 2nd homes!)
3. Classic demographics and timing storm
4. Classic capitalist / human bubble process
Why do you all feel the need to BLAME someone? “Bubbles” and “busts” are as old and as natural as capitalism and human economic. They have been happening for 1,000 of years. Sure there were supporting factors. But the main driver was human speculators attaching their sheep-like fixation on housing: “it will never go down”.
This one was a big one. Lots of billionaire were made because the leverage is so good. And the aftermath was tough. Systematically worrisome. We had some bad regulators at FDIC, Fed, Treasury who did not recognize the problem soon enough. However — Its over.
Running around looking for “blame”… its like primates wanted to sacrifice someone to the volcano.
March 19th, 2010 at 9:04 am
[...] noted last night, Alan Greenspan has blamed the crisis on a lack of regulation rather than ultra-low rates. (You can [...]
March 19th, 2010 at 9:49 am
@flipspiceland:
“I get it. The ol’ “Mistakes were made”, rhetorical flourish, eh.”
No, you don’t get it. Not even close to what I actually wrote.
“I don’t just disagree with you. I’d like to say some things about you that BR would likely strike out.”
Why? Because I say who the recurrent crises in (or of) capitalism attributes to character flaws, false thinking, or “mistakes” of individual character masks in it hasn’t really understood how this social-economic system works?
rc
March 19th, 2010 at 10:06 am
cognos,
““Bubbles” and “busts” are as old and as natural as capitalism and human economic. They have been happening for 1,000 of years.”
Well, not for 1000 of years, and not as “natural” and old as “human economy”. Capitalism with it’s boom and bust cycles and recurrent financial crises is about 500 years old. It started in Europe in the 16th century, actually as agrarian capitalism of the absolutist European states, and was spread all over the world since then, mostly by force, violence, and war. (see Immanuel Wallerstein, The Modern World System, Academic Press New York San Francisco London, Vol.1 1974, Vol2. 1980, Vol.3 1989). Before that human’s main mode of economy hadn’t been based on production for a generalized market for profit.
rc
March 19th, 2010 at 4:45 pm
[...] – “While [Alan Greenspan] is correct in pointing out that his own failures as a bank regulator are in part to blame, he needs to also recognize that his failures in setting monetary policy was also a major factor,” Barry Ritholtz says. [...]
March 19th, 2010 at 10:16 pm
cc Mr A. Greenspan?
March 21st, 2010 at 12:15 pm
Rootless says…
…”booms” and “busts” have only been around for 500 years. Before that everything was…?
Hmm… was that before or after Adam and Eve left the garden?