Hundred Power

October 26, 2008

Alan Greenspan actually communicated reasonably clearly this week.
This is news itself. But, what he said was his judgment about
regulating the new-fangled financial instruments was wrong. Greenspan
opposed the regulation, and that ideology carried the day some years
ago. Fair, transparent, standardized, liquid markets and exchanges had
been created for futures contracts, stock options, index options,
warrants, and every type of esoteric vehicle in the 20th century.
So, even though something like a Credit Default Swap (CDS) is
an "institutional" vehicle, it needed some rules. Otherwise, it
was subject to abuse.

Fire insurance sounds pretty standard and even dull. But, it's pretty dicey if your insurance company doesn't have the reserves to pay the claims. All at once, it too can look like a Ponzi Scheme. Greenspan said he had expected the "institutional" ( read sophisticated ) managers to protect their respective businesses and stockholders. So, he admitted this week he was wrong. Way too late, Greenspin.

Nick Anderson may have the best editorial cartoon shot at Greenspan.  Click here to take a look.
And, other cartoonists are also mocking Greenspan. 
Click here to find the latest.

Greenspan is getting his just desserts. But have you noticed
that he's also being made the scapegoat for the whole financial
crisis? Greenspan was not a dictator who is solely to blame.
Where was the entire U.S. Congress? Where were the grown-ups
in the Executive Branch? What does it take to get the political
class to do its job?

One option (just one of many) is to vote for "The None-of-the-Above Party." But, you've probably already come up with your own conclusions. Just vote.