Greenspan admits 'flaw' in ideology
source: http://english.aljazeera.net/business/2008/10/20081023161043967668.html
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- wlwatkins
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Alan Greenspan, the former US Federal Reserve chairman, has publicly admitted that the US free-market ideology that he and others have championed for decades is flawed.
Greenspan, who headed the US central bank for more than 18 years, said on Thursday that he had "found a flaw ... in the model that I perceived is the critical functioning structure that defines how the world works".
The admission is one of the most significant comments made by a key architect of the world financial system that is now in chaos amid the global economic crisis.
His comments came as he gave evidence to the US House committee on oversight and government, which is seeking to discover if regulatory failings had contributed to the turmoil.
Henry Waxman, the committee chairman, asked Greenspan: "You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crises. You were advised to do so by many others and now the whole economy is paying its price.
"Do you feel that your ideology pushed you to make decisions that you wish you had not made?"
Greenspan replied: "Yes I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact."
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Bailout 'adequate'
Greenspan said that a necessary condition for the crisis to end will be a stabilisation in home prices, but he said that was not likely to occur for "many months in the future".
When home prices finally stabilise, Greenspan said, then "the market freeze should begin to measurably thaw and frightened investors will take tentative steps towards re-engagement with risk".
Greenspan said until that occurs, the government was correct in moving forward aggressively with efforts to support the financial sector.
He called the $700bn rescue package passed by the US congress on October 10 "adequate to serve the need" and said that its effect was already being felt in the markets.
Greenspan, who headed the US central bank for more than 18 years, said on Thursday that he had "found a flaw ... in the model that I perceived is the critical functioning structure that defines how the world works".
The admission is one of the most significant comments made by a key architect of the world financial system that is now in chaos amid the global economic crisis.
His comments came as he gave evidence to the US House committee on oversight and government, which is seeking to discover if regulatory failings had contributed to the turmoil.
Henry Waxman, the committee chairman, asked Greenspan: "You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crises. You were advised to do so by many others and now the whole economy is paying its price.
"Do you feel that your ideology pushed you to make decisions that you wish you had not made?"
Greenspan replied: "Yes I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact."
...............
Bailout 'adequate'
Greenspan said that a necessary condition for the crisis to end will be a stabilisation in home prices, but he said that was not likely to occur for "many months in the future".
When home prices finally stabilise, Greenspan said, then "the market freeze should begin to measurably thaw and frightened investors will take tentative steps towards re-engagement with risk".
Greenspan said until that occurs, the government was correct in moving forward aggressively with efforts to support the financial sector.
He called the $700bn rescue package passed by the US congress on October 10 "adequate to serve the need" and said that its effect was already being felt in the markets.
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wlwatkins
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Can some one just please tell me just how Bush managed to cause this and why?...
He's up to something!
- 4 years ago
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wlwatkins
