SHOOT: He assumed that markets are free and fair; of course neither is the case. What more could you expect from someone who was, essentially, a disciple of Ayn Rand?
The Federal Reserve chairman — an economist and a disciple of libertarian icon Ayn Rand — met his first major challenge in office by preventing the 1987 stock-market crash from spiraling into something much worse. Then, in the 1990s, he presided over a long economic and financial-market boom and attained the status of Washington's resident wizard. But the super-low interest rates Greenspan brought in the early 2000s and his long-standing disdain for regulation are now held up as leading causes of the mortgage crisis. The maestro admitted in an October congressional hearing that he had "made a mistake in presuming" that financial firms could regulate themselves. |
clipped from www.time.com
1 comment:
Objectivists know that Alan Greenspan gave up capitalism and Ayn Rand long before he joined the Fed in '87. Real capitalists want to dissolve the Fed, not run it. That's like a free market doctor who wants to be the federal Health Czar.
Greenspan shouldn't have worried that firms couldn't regulate themselves, because financial markets are not currently "free" and markets were not the cause of the recent boom/bust.
However, his organization's low interest rates, the CRA, Fannie Mae, Freddie Mac and other political pressures for affordable housing, were the cause. Truly free markets would have told risky borrowers what they should have heard to begin with: "load denied". It is only politicians' desire to circumvent markets and get people homes anyway, that caused the bubble.
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