Don't know much about . . . . : Continued

Like most people, including most economists, I don’t know much about economics, and therefore I don’t understand at all why we’re facing an economic crisis right now, as opposed to a year ago or a year from now. Something about over-leveraged subprime derivatives, which goes a long way towards explaining why I'm not rich. That’s why I read with interest an article in today’s Washington Post which seems to suggest that whatever it was that went wrong, it was Alan Greenspan’s fault.

For a long time, I’ve thought of Greenspan as the J. Edgar Hoover of finance, although Greenspan only held his post at the Federal Reserve for nineteen years, as compared to Hoover’s 48 years at the FBI. Also, to my knowledge, Greenspan is not a cross dresser.

The Post documents that despite appearances to the contrary, a lot of people have seen the potential for our economic meltdown for a very long time, including some congressional testimony dating back as far as the early nineties. Greenspan, a self-avowed libertarian, always had faith in the corrective power of the capitalist marketplace, in part arguing that integrity was itself a commodity which promotes stability. But now he seems to have leveraged his opinion: “The problem is not that the contracts failed. Rather, the people using them got greedy.” A lack of integrity spawned the crisis, he argued in a speech a week ago at Georgetown University, intimating that those peddling derivatives were not as reliable as “the pharmacist who fills the prescription ordered by our physician.” So there’s nothing wrong with unregulated markets, only with greedy capitalists.

Apparently if Greenspan were a zookeeper, he would offer the lions a balanced diet, confident that they would choose to eat healthy, including lots of fruits and vegetables and not too much red meat. Pharmacists,apparently, are natural vegetarians, so they can serve as a kind of economic control group.

The full Post article, very worth reading, is available here: http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?pagewanted=1&_r=1&th&adxnnl=1&emc=th&adxnnlx=1223568417-x4WVFeRo10fLkP1ibrviig

In the meantime, I was pleased to learn yesterday that AIG, which holds all of Mary’s gone-yesterday, here-today, who-knows-tomorrow retirement savings, is so confident in its corporate future that they just held a four-hundred-thousand dollar, week-long retreat for top executives. This got those bad executives a stern lecture from Congress, which seems to think just because it bailed AIG out to the tune of $70 billion, it can tell them they should settle for take-out until further notice.

I'll have the leveraged pot stickers with a subprime pedicure on the side.