Everything I'll Never Know I Didn't Learn In Kindergarten

Facing a firing line of questions from Washington lawmakers, Alan Greenspan, the former Federal Reserve chairman once considered the infallible maestro of the financial system, admitted on Thursday that he “made a mistake” in trusting that free markets could regulate themselves without government oversight…

Although he defended the use of derivatives in general, Mr. Greenspan, who left his post in 2006, told members of the House Committee on Oversight and Government Reform that he was “partially” wrong in not having tried to regulate the market for credit-default swaps.

But in a tense exchange with Representative Henry A. Waxman, the California Democrat who is chairman of the committee and America's Greatest Congressman, Mr. Greenspan conceded a more serious flaw in his own philosophy that unfettered free markets sit at the root of a superior economy.

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Yes, you made a mistake that any three year old could understandably make.

 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. “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.”

It's astonishing how delusional "libertarians" can be.

One, before those 40 years, there was even more considerable evidence that well regulated markets were working even more exceptionally well.

Two, yes, there was 40 years of considerable evidence that the self interests of organizations and the magic of unfettered free markets were much more capable of protecting shareholders and taxpayers than dreaded regulations, as long as you willfully ignored Drexel Burnham Lambert, the S&L bailout, the tech bubble, the summer long rolling black outs of California, Enron, and WorldCom.

As long as you went out of your way to ignore the Crash of 1929, the Great Depression, any and everything even the most naive and gullible person might know about human nature, and the entire recorded history of commerce, there was considerable evidence that the self-interest of organizations would prevail over the selfishness of the individual.

Organizations don't have any "self interests".  They don't have any self.  They are made up of people.  And if the self interests of the people--such as making $100 million dollars, or buying a Maybach, or a Park Avenue apartment--conflict with interests of the organizations, the organizations always lose.

Always.  They always have.  They always will.

That's why we have all these awful regulations.  It's not because the people of the past were really bored without Dish On Demand or the XBox and had so much time on their hands that they couldn't think of anything better to do than sit around under the old gaslight and play "Let's Make A Regulation".  It's not because they hated prosperity.  It's not because they just liked regulating.

It's because, at some time in the past, the lack of regulation of the Amazing, Miracle Free Market caused such a colossal fuck up that United States Congressmen were forced at pitchfork and torch point to actually pass laws to regulate the corporations they worked for.

Before the mob beat down their doors.

Why don't people understand this?  Regulations are not your enemy.  They are your national inheritance.  They are a gift from the Americans of the past, who lost their life savings, who got cancer from drinking their tap water, who burned up with their children in the family car.

Their gift to you is a regulation that says, "Hope you don't have to suffer the shitty thing that the magical unfettered free market did to me!"  

And you know what your chances of enjoying that gift are?

But he still gestured toward his faith in free markets, however shaky it may have become. “It is important to remember, however, that whatever regulatory changes are made, they will pale in comparison to the change already evident in today’s markets,” he said. Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime.  

About zero.

Comments

[KitE]

Fucking libertarians; self-interested bastards who refuse to acknowledge that the WHOLE of civilization, from those taxpayer-sponsored roads, police, school systems, etc, actually DID play a part in their success; they did not spring forth from the forehead of Zeus as fully formed supermen/women who have no need of the social contract and what it provides. I recall knowing some newbie libertarians here in Colorado in the 1970's (they seemed to have been extra powerful here); greedy bastards to a man, and also doing their best to spread the word amongst the more gullible with the teaser of "we want pot legalized too, so join up!". Nice slight of hand there boys.

As to Greenspan's idea that:
""It is important to remember, however, that whatever regulatory changes are made, they will pale in comparison to the change already evident in today’s markets,” he said. Those markets for an indefinite future will be far more restrained than would any currently contemplated new regulatory regime."
Yeah, right; I call bullshit on that one. As soon as the high rollers think no one is watching, they'll be right back at it. Guaranteed.

[amutepiggy]

dear ricky, you are my favorite blog ever.

well, you and thepoorman.

love,
alexis from....THE INTERNET!

[ricky]

Thanks!

Sorry about the comments thing. Sometimes I forget to turn them on.

Also, the Poorman was a much, much better blog back when he used to have me on his blog roll.

Now he's okay.

[ricky]

Oh, wait. I'm back on the blog roll. So I'd have to agree the Poorman is an amazing blog. Amazing.