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    • The Decline & Fall Of The Soviet Union
      Our society seems fascinated by the fall of empires and nations. You rarely see a book on the “birth” of Rome, say, it’s the collapse we care about. In this I’m a bit odd, I prefer the creation period, the early years when everything goes right, to the fall, but it’s important to see that death precedes birth. The Czars fall, the Soviets rise… The Soviets fa […]
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Alan Greenspan: Who could have predicted?

Alan Greenspan, testifying before Congress today that he had no idea that Wall Street tycoons would abuse the system:

Greenspan was the head of the Federal Reserve for 18 1/2 years. In testimony prepared for the House Government Oversight and Reform Committee, he voiced shock over the present turn of events and called conditions deplorable.

He said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a “state of shocked disbelief”. And Greenspan also blamed the problems on heavy demand for securities backed by subprine mortgages by investors who did not worry that the boom in home prices might come to an end.”

Ok, I have to stop right there for a second. The subprime mortgage problem was *completely* predictable. Alan Greenspan worked his ass off to keep inflation low and one surefire way to do it is to depress wages. When mortgages are skyrocketing and wages increase by a lousy 3% for year after year, what else can we expect but that people eventually won’t be able to afford the house they live in? How could he not know that the most productive workers in the world haven’t benefitted from their productivity in the past 20 years? He set the conditions for it.

And as for investors not looking out for shareholders, well, that comes as a bit of a shock but shouldn’t be surprising when human nature isn’t held in check by regulation. But Alan, self-actualized, Ayn Randian, Greenspan didn’t think that the finance industry should be forced to play by the rules of the rest of society. It might inhibit creativity. So, now we have some extremely creative players who found out-of-the-box ways to lose our money. But at least they were allowed to live freely without conformity.

And Greenspan is *shocked* that investors would go gangbusters and be selfish and greedy? Really? I thought that was the point.