Greenspan's testimony

Alan Greenspan's comments this week about the "once-in-a-century credit tsunami" were of his usual verbosity, with this startling admission:

"...those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief."

Is he trying to say that greed doesn't work? Did Gordon Gekko lie to us? Stop the presses!

The NYT described an exchange between Greenspan and Henry Waxman (D-CA):

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.

Over at TPM, Dean Baker reminds us of Greenspan's Ayn-Randian views, and concludes with his take on free-market fundamentalists' real desires for reverse socialism:

...the Wall Street hotshots didn't have and don't want a free market. They want to be able to take big risks with other people's money, both their shareholders and the taxpayers.

This is not to say that we would want a real free market in finance. It's not even clear what that would look like. But it is clear that the Wall Street hotshots who brought us this disaster have no interest in a free market. They want to be able to operate with a government security blanket while not being required to contain risk or pay for this insurance. Calling them, or their patron Alan Greenspan, free market ideologues is far too generous.