20/20 Hindsight

A few days ago I wrote that I didn't feel that I knew enough about the economy to comment intellegently upon it. It appears that I wasn't alone.

Speaking to the House Oversight Committee, Alan Greenspan described himself as being "...in a state of shocked disbelief" over the state of the credit industry. (Read all about it.) Alan Greenspan was chairman of the Federal Reserve from 1987 to 2006. In this post he virtually ruled the U.S. economic system, and his conservative fiscal policies guided the U.S through three presidents and a long period of economic prosperity. His policies have been continued by his successors.

And they have failed us miserably, and it appears that no one was more surprised than Greenspan.

For years, Greenspan's financial philosophy has been to let it regulate itself, assuming that the banking and financial institutions he had power over would simply never do anything that wasn't in their own best interest. He was wrong; they smelled money and it made them stupid. In retrospect, and looking back with flawless 20/20 hindsight, anyone who had ever seen a teenage sex comedy could have told them how that would turn out. Gotta love that hindsight; it never fails to let you know a disaster is looming once you've already been buried in shit.

Nor would it be accurate to say that no one warned Greenspan that trouble was coming; but he looked at all the signs, consulted his Ouija board, read his tea leaves and pronounced the economy sound. Be fair, though; even though there were warning signs, even though there were people telling him that there was trouble on the horizon, the scope of the trouble that showed up surprised everyone, not just Alan Greenspan.

The difference is that Alan Greenspan was the person we trusted to protect us from something like this, the person we endowed with the awesome economic power that was supposed to protect us from our own greed. He kind of dropped the ball on that one. Even after he had left office, we continued to place our trust in his successors just as if he were still on the throne himself. He set the tone of the office, he made the policies, he was the hand on the tiller and we kept to the course he set for us. Straight for the shoals.

It's not like all of this just suddenly happened; it had to have been happening over a very long time. The problem didn't just suddenly occur; it had been building up for years. Nearly twenty of them, to be exact. Greeenspan's laisez faire attitude didn't just suddenly bugger us, we'd had our pants around our ankles for years but didn't have the brains to realize we were being screwed.

Nor are we, the people, blameless. We didn't just wake up one morning a couple of months ago all greedy; the greed was there and we happily wallowed in it.

We entrusted one man with the responsibility to protect us from our own greed, and kept to his policies after he was gone, and his way of "protecting" us was to leave the economy alone in the hope that it would regulate itself. In the end, this policy failed. Big time.

Perhaps the problem was that we were ever willing to entrust any one person with the power and responsibility to govern our lives to such an extent.

Shame on us.

The Blues Viking

Greenspan on Wikipedia:
http://en.wikipedia.org/wiki/Alan_Greenspan

The opinions here expressed are mine and if you don’t like them you can get your own damn blog.