Saturday, November 01, 2008

What hath Alan "John Galt" Greenspan wrought?

Daily Kos diarist "Devilstower" has a must-read post tracing the career of former Fed Chairman Alan Greenspan, from his early days as a member of Ayn Rand's Objectivist cult to considering his legacy. Namely, that would be his successful push to change this country's long-standing moneary policy by deregulating the securities industry ,which led to the current financial crisis.

An excerpt:
When Ford replaced Nixon, Greenspan became the chair of the Council of Economic Advisors. And when Reagan took power, Greenspan was no longer the voice crying in the wilderness, he was the very center of the establishment. Objectivism and Conservatism had united in Market Fundamentalism, and that force was on a jihad against regulation of any kind.

For the next thirty years, Greenspan would cheer the deregulation of the S&Ls and join John McCain in trying to protect Charles Keating from regulators. He would praise the deregulation of energy trading, and assure everyone that companies like Enron were pointing the way to greater efficiency and lower consumer prices -- and collect the 2000 "Enron Prize" in exchange. He would urge not only the creation of credit default swaps, but applaud their lack of regulation and invisibility in the system. He would argue against oversight, against limits on CEO pay, and for the increasingly complex systems by which banks generated new instruments of credit.

No one person did more to spread Rand's message of unregulated markets, unconstrained free trade, and unlimited power for corporate officers than Alan Greenspan.

If you were to asked to assign blame for the collapse of Neo-Keynesian economics as the governing ideology of the US, and the government oversight and fine-tuning that came with it, you would be hard-pressed to find a bigger culprit than Greenspan, with the only exception, of course, being Ronald Reagan. We really shouldn't be surprised by Greenspan's latest attempt to rehabilitate his legacy by loudly disowning the radical deregulation he rammed through.

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1 comment:

J.C. Ernharth said...

The whole blame deregulation for this problem is a joke. At best, we had re-regulation:

We're most certainly not a free market, nothing close. Regulation, especially in the financial segment, is the brainchild of this crisis. Please read the provided link for a complete counter to the Kos-Krugman critique of what's been happening. Note: it is no defense of the system as it was or is.