Greenspan still won't accept blame for the global financial meltdown


In yet another public cry of innocence, Alan Greenspan tries to explain why he was not a fault for the two asset bubbles his policies helped to inflate unchecked. The overall gist of his piece is that he believes "bank regulators cannot fully or accurately forecast whether, for example, sub-prime mortgages will turn toxic, or a particular tranche of a collateralised debt obligation will default, or even if the financial system will seize up. A large fraction of such difficult forecasts will invariably be proved wrong." So, he concludes, since the bank regulators can't forecast these problems consistently, it's not his fault that everything that now plagues our economic system went wrong during his tenure.

He goes on to say, "I feared 'irrational exuberance' in 1996, but the dot-com bubble proceeded to inflate for another four years. Similarly, I opined in a federal open market committee meeting in 2002 that 'it's hard to escape the conclusion that . . . our extraordinary housing boom . . . finan­ced by very large increases in mortgage debt, cannot continue indefinitely into the future.' The housing bubble did continue to inflate into 2006."