Somehow Alan Greenspan has been able to escape blame for the mess we find our selves in today. But as Peter Goodman points out this morning, the fingerprints of Greenspan’s radical Ayn Rand libertarianism are all over the Credit Crisis.
Time and again, Mr. Greenspan — a revered figure affectionately nicknamed the Oracle — proclaimed that risks could be handled by the markets themselves.
“Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury,” recalled Alan S. Blinder, a former Federal Reserve board member and an economist at Princeton University. “I think of him as consistently cheerleading on derivatives.”
Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission, says Mr. Greenspan opposes regulating derivatives because of a fundamental disdain for government.
Mr. Levitt said that Mr. Greenspan’s authority and grasp of global finance consistently persuaded less financially sophisticated lawmakers to follow his lead.
“I always felt that the titans of our legislature didn’t want to reveal their own inability to understand some of the concepts that Mr. Greenspan was setting forth,” Mr. Levitt said. “I don’t recall anyone ever saying, ‘What do you mean by that, Alan?’ ”
Levitt’s comments that the man who ruled our economy across four administrations had “a fundamental disdain for government”, sums up the Reagan/ Milton Friedman / Ayn Rand legacy of the last 30 years. Perhaps restoring that trust in government may be one of the biggest tasks facing Obama in the next four years.