Former Fed chairman Alan Greenspan, the number one culprit behind the financial meltdown, has truly excelled himself now with his line to BusinessWeek that the financial crisis was a "once in a century event" that caught everyone off guard.
This is total crap. "Once in a century". As soon as I read that, it set the alarm bells ringing. It sounded familiar. And then I remembered. As The Economist says, there was a time in the 90s talked about once in a century events in a different way.
As he said back then: "When we look back at the 1990s, from the perspective of 2010, the nature of the forces currently in train will presumably have become clearer. We may conceivably conclude from that vantage point that, at the turn of the millennium, the American economy was experiencing a once-in-a-century acceleration of innovation, which propelled forward productivity, output, corporate profits and stock prices at a pace not seen in generations, if ever."
As I mentioned here, economists blame the financial meltdown on Greenspan. They gave him the Dynamite Prize in Economics for flooding the market with cheap money by keeping interest rates too low for too long. Greenspan, a champion of free markets, had resisted any call to regulate derivatives and the shadow banking system which nearly destroyed the global economy. Indeed, Greenspan was a champion of derivatives telling the Futures Inudstry Association in 1999 that they would "enhance the process of wealth creation". What they did in the end was destroy wealth but cheerleader Greenspan didn't see that.
Also, Greenspan was a champion of subprime loans. As he said in 2005: "It is essential that policymakers, regulators, bankers, researchers, and consumer groups remain fully engaged in monitoring developments in the consumer finance market and continually seek to better understand the strengths and weaknesses of the financial services industry, including how well it serves lower-income and underserved consumers." He was referring to consumers who could not repay their loans and who were easy targets for predators.
If the meltdown was a once in a century event, Greenspan was the one who made it possible. David Merkel writes from the Wall St Pit that the meltdown was not a once in a century event. "It was produced by weak monetary policy, and weak credit policy, leading to too much private debt being created. Had the Fed done its duty, and kept monetary policy tighter for longer, we might not have come to this ugly juncture. This situation is not an accident. It could have been prevented by the Fed had it kept interest rates higher for longer."
A great example for fellow CEOs. You can be certain HE didn’t lose anything personally; not even his ‘performance’ bonus, as usual!