October 23, 2008

A Startling Comment on Free Markets By Alan Greenspan

Posted in Free Markets at 7:08 pm by davidprudente

So…here I go again…blogging away. If you’re looking for the extra-credit assignment, go down to the next posting.

Alan Greenspan, the former Chairman of the Federal Reserve made a startling comment in his testimony before congress regarding his responsibility in the credit crisis (see below). Click here to read the full article.

“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.”