Friday, October 24, 2008

the greenspan bubble bursts, or comparing greenspan to bill buckner is grossly unfair - to bill buckner

Finally Congress has burst the Alan Greenspan bubble. No longer do they assume that the pronouncements from his wizened little head are necessarily wise. Greenspan opposed regulating derivatives. Greenspan "helped" us get over the bursting tech bubble by starting out a new bubble, in real estate. Greenspan, a true acolyte of the nutty Ayn Rand, said markets would regulate themselves efficiently and governments shouldn't interfere.

And now Greenspan has been proven comprehensively wrong. At least he is alive to see it, and to say, about the bursting of his ideological bubble, "You know, that's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

That's true if you ignore the fact that people like Nobel Prize winning economist Paul Krugman and many others were warning YEARS ago of the foolhardiness of the Greenspan approach. But like other ideologues, Greenspan found it easy to ignore the evidence until Wall Street crashed with a sufficiently thunderous roar to penetrate even his stuffed-with-pages-from-"Atlas Shrugged" ears.

But I'll have to disagree a little with Congressman John Yarmuth, a Kentucky Democrat, who called Greenspan "Bill Buckner." Yarmuth was referring of course to the gimpy-kneed Boston Red Sox first baseman who let a ground ball go thru his legs in the 1986 World Series, losing the game, and allowing the New York Mets to go on to win the championship.

Buckner wasn't blinded to the evidence of where the ball was by clinging to an ideology. Buckner didn't assume that the ball would automatically bounce into his glove. Buckner fully understood the ramifications of his mistake. Buckner was once a good defensive player whose bad knees made it difficult for him by October 1986. Buckner was unlucky, and given his limitations should have been removed for defensive purposes by that point, as he had been 100 times that season.

Comparing Bucker to Greenspan is really unfair - to Bill Buckner. Buckner did his best and made an honest error. Greenspan was self-delusional and chose to serve his indefensible God, the invisible hand (talk about a misunderstood concept), despite evidence that his God was a false God, and we're all paying now.

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