Alan Greenspan admits a “mistake”

October 23, 2008 by lestro

by lestro

I am just completely taken aback by this admission…

Facing a firing line of questions from Washington lawmakers, Alan Greenspan, the former Federal Reserve chairman once considered the infallible maestro of the financial system, admitted on Thursday that he “made a mistake” in trusting that free markets could regulate themselves without government oversight.

Wow. Shit must be worse than we thought.

Greenspan was all about deregulation and all about the market being the answer to the ills of the world.

But what he failed to count on was the overwhelming greed.

Which seems odd, because no one gets into the market because it is fulfilling, they get in to make MONEY. Usually at any cost. Didn’t he see Bonfire of the Vanities or Wall Street?

The New York Times continues:

But in a tense exchange with Representative Henry A. Waxman, the California Democrat who is chairman of the committee, Mr. Greenspan conceded a more serious flaw in his own philosophy that unfettered free markets sit at the root of a superior economy. “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,” Mr. Greenspan said. 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.”

Say what you will, at least he can admit that he was wrong. That should count for something.

And that’s more than can be said for Bush or McCain, both of whom are advocating more of the same.

Related:

Is hell freezing over?

Through the looking glass

The exorcism of voodoo economics