{"id":3004,"date":"2009-03-11T13:53:38","date_gmt":"2009-03-11T18:53:38","guid":{"rendered":"http:\/\/1boringoldman.com\/?p=3004"},"modified":"2009-03-11T15:16:48","modified_gmt":"2009-03-11T20:16:48","slug":"so-shrug-already","status":"publish","type":"post","link":"https:\/\/1boringoldman.com\/index.php\/2009\/03\/11\/so-shrug-already\/","title":{"rendered":"so shrug already…"},"content":{"rendered":"
No one ever accused Alan Greenspan of not having nerve. We need advice from him channeling his childhood love, Ayn Rand, like we need tapeworms. Rand said Atlas Shrugged<\/strong> and all the heros went off into the desert to live and let us flounder along. Alan, however, has decided to stay around town and make suggestions. Lucky us! Yesterday, the Wall Street Journal<\/strong> featured John Yoo. Today they give us Alan Greenspan. <\/div>\n


that’s George Washington in the background, frowning<\/sup><\/p>\n

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The Fed Didn’t Cause the Housing Bubble <\/a>
Any new regulations should help direct savings toward productive investments <\/strong>
By ALAN GREENSPAN<\/a><\/strong><\/div>\n

<\/p>\n

We are in the midst of a global crisis that will unquestionably rank as the most virulent since the 1930s. It will eventually subside and pass into history. But how the interacting and reinforcing causes and effects of this severe contraction are interpreted will shape the reconfiguration of our currently disabled global financial system.<\/div>\n<\/blockquote>\n
Greenspan prattles on basically saying that it’s not his fault – blah, blah, blah. Then he gets to his point…<\/div>\n
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… the growth path of highly competitive markets is cyclical. And on rare occasions it can break down, with consequences such as those we are currently experiencing. It is now very clear that the levels of complexity to which market practitioners at the height of their euphoria tried to push risk-management techniques and products were too much for even the most sophisticated market players to handle properly and prudently.<\/strong><\/font><\/div>\n

However, the appropriate policy response is not to bridle financial intermediation with heavy regulation. That would stifle important advances in finance that enhance standards of living. <\/strong><\/font>Remember, prior to the crisis, the U.S. economy exhibited an impressive degree of productivity advance. To achieve that with a modest level of combined domestic and borrowed foreign savings was a measure of our financial system’s precrisis success. The solutions for the financial-market failures revealed by the crisis are higher capital requirements and a wider prosecution of fraud – not increased micromanagement by government entities.<\/strong><\/font><\/p>\n

Any new regulations should improve the ability of financial institutions to effectively direct a nation’s savings into the most productive capital investments. Much regulation fails that test, and is often costly and counterproductive.<\/strong><\/font> Adequate capital and collateral requirements can address the weaknesses that the crisis has unearthed. Such requirements will not be overly intrusive, and thus will not interfere unduly in private-sector business decisions.<\/p>\n

If we are to retain a dynamic world economy capable of producing prosperity and future sustainable growth, we cannot rely on governments to intermediate saving and investment flows. Our challenge in the months ahead will be to install a regulatory regime that will ensure responsible risk management on the part of financial institutions, while encouraging them to continue taking the risks necessary and inherent in any successful market economy.<\/div>\n<\/blockquote>\n
I spared you the "I didn’t do it" part. But I thought this was really one fine way of saying things, "It is now very clear that the levels of complexity to which market practitioners at the height of their euphoria tried to push risk-management techniques and products were too much for even the most sophisticated market players to handle properly and prudently.<\/strong><\/font>" He might of well say, "Imagine my surprise. When I shut down Brooksley Born’s [<\/strong><\/font>the economy of the entire planet…<\/font><\/a><\/strong>] attempt to regulate the Derivatives and created a Casino for Speculators, it filled up with gamblers!<\/strong><\/font>"<\/div>\n

This really isn’t a good time for Alan Greenspan to be suggesting anything, much less suggesting that we not micromanage the financial industry. It’s just not the right time for him to do much except go off into the desert with John Galt and leave us alone. His financial wizard<\/strong><\/em> days are over.<\/p>\n

And as for the Wall Street Journal<\/strong>, I wonder if Bernard Madoff is writing an op-ed tomorrow to tell us about the importance of Hedge Funds?<\/p>\n

Says Larisa:<\/div>\n
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Comrade Greenspan says that the Ministry of $$ didn’t do it<\/a>…<\/strong>
at-largely<\/strong>
By Larisa Alexandrovna <\/strong><\/div>\n

<\/p>\n

Former Fed Chairman Alan Greenspan has a rather strange little column today in the Wall Street Murdoch<\/a><\/strong>. But instead of snipping parts of it for you to read, I think a better use of your time would be to read Mathew Yglesias’<\/a><\/strong> take on this:<\/div>\n
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