Wednesday, March 11, 2009

Greenspan Tries Again

Ever since the US economy and housing market began deteriorating, we have noted with veiled amusement the apparent ubiquity of Alan Greenspan. In the face of ever increasing criticism of his tenure as Federal Reserve Chairman, the poor fellow has been doing all he can to preserve his legacy. For what it's worth, we would concur with Mr. Greenspan that the Fed did not, in and of itself, cause the housing bubble(Although Greenspan never argued, during the "good times", when he would receive credit for producing such a long, uninterrupted period of prosperity). There are, of course, innumberable causes for the "bubble", some of which we may never be able to identify as direct contributors.

What Mr. Greenspan doesn't seem to understand, however, is that no amount of editorial writing and speech making will ever be able to restore his reputation. First of all, the Proles tend to seek a simplified set of causes for every major event such as the Crisis of today. Greenspan's explanation involves events in far away lands that will be difficult for the workingman to fathom. For example, we know personally of an individual (who wields power over others in this world..apologies for lack of specificity) who proclaimed the Chinese effect on building material costs to be negligible in reality and "the biggest hoax of all time". This is an extreme example, but it serves to make the point. Secondly, every Crisis must have a scapegoat, and once that scapegoat is identified, it is impossible to reverse course. Mr. Greenspan, being a retired and elderly man, was an easy target for that scapegoat. Bankers have been thrown into the mix as well, since the Magnitude of this Crisis requires several scapegoats. 

Notably absent from the list of those Scapegoated are the Government officials whose job it is to regulate the banking industry and the marketplace. They have, of course, used the Bully Pulpit quite effectively.
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