Greenspan Suffers From Acute Total Amnesia

Friday, September 07, 2007

Alan Greenspan takes another step down. After his transformation from "Maestro" to "Easy Al" he now fights for the nickname "Greenshill", at least when one follows his comments from Friday. Alan Greenspan, the man solehandedly responsible for the mortgage mess concluded in a speech to economists that today's turmoil resembles the sentiment before the crises of '87 and '98. According to him the mortgage malaise has infected the rest of the economy. This assessment comes from the man who preferred to douse every monetary inflationary excess with more of the poison that caused all exaggerations in the first place.
Greenspan must suffer from acute total amnesia. It was him who once praised the doubtful fact that all Americans could buy a house because there were such financial innovations like zero down ARMs.
Greenspan did not turn a nation into homeowners. Greenspan pushed a whole nation into the highest debt ever, be it on the private, communal or federal level.
To say now that bubbles cannot be defused until the fever breaks is an outright lie. It was in his hands to pinch the bubbles and he never did. Instead of taking the punch bowl away Greenspan laced it with evermore liquidity and now we look at a toxic cocktail and he starts trying to shift the blame.
This crisis will play out as all crises. Denial > anxiety > fear > depression > panic.

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