Today, former Federal Reserve Chairman Alan Greenspan, speaking for the laissez faire tribe, informed the House Financial Oversight Committee that "those of us who looked to the self-interest of financial institutions to protect shareholder's equity are in a state of shocked disbelief . . ." There. It's official. The last group of earth dwellers who are shocked into disbelief by unregulated bankers-run-wild tanking the economy is on record. Most of the rest of us knew that a long time ago. Remember the Gilded Age? Remember the S&L crisis? Remember ENRON? Remember the Credit Crunch? Remember . . . last week?
In any event, poor Alan sheepishly admitted to the committee that he had found "a flaw in the model that I perceived is the critical functioning structure that defines how the world works." After all, despite ENRON, the junk bond crises, and all the rest, he'd "been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' This is nothing more than an admission that for most of his career he's been purposely blind to the consistent rule that unregulated markets more often than not lead to disruptions and disasters. Welcome to the reality-based community, Mr. Greenspan!