Hey you economics guys
- Thread starter pmills
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First of all, I don't think you can quite say that Greenspan admitted he fucked up. If you listen to it he admits that there was a flaw in his own economic model but he sort of pawns off much of the blame on the bureaucracy of the fed and power structure.
With that said, I am not sure how I feel about Greenspan. On the one hand I sort of agree that generally a free market is the best way to go. In the best case scenario you do minimize dead weight loss and everybody benefits. Anybody who has ever taken any economics knows that. However, I don't think Greenspan's hands off approach has necessarily ever been good for the country. He's been hesitant to break up monopolies and his methods seem to have overwhelmingly helped old white men like himself. Yet on the other hand, if there is one thing that our country took out of the 30s, it was the fact that banks must be regulated. Just because a new type of banking has come into being under the guise of "financial institutions" does not mean that they should be able to bypass these laws. They still are in a very basic sense banks, so I think it is common sense that they should have had some regulation.
The root of the problem with this crisis though is that these new types forms of banking and investing such as derivatives popped up so quickly that nobody knew what to do with them. There is no historical evidence to go on and admittedly it would have been tough to convince the fed to do much of anything. But ultimately, I think Greenspan's continuous negligence with respect to these lending practices makes him much to blame for the crisis.
I know I sound like a bit of a bitch here because I'm sort of agreeing with both sides, it's just that I'm not totally sure that guys like Krugman were right to bring down the hammer on Greenspan because so many of his policies with respect to the problems that are causing our current economic crisis were the same policies that anybody in his position would have made.
So basically, I am hardly arrogant enough to claim the wisdom neccesary to apportion blame for this. The fed probably could have prevented this, but I am not sure who, given the authority, would have made the drastic policy changes to make them.
Sorry, not gonna check for spelling, grammer, or even logic of my ideas, just typing as fast as I can on an internet forum.
With that said, I am not sure how I feel about Greenspan. On the one hand I sort of agree that generally a free market is the best way to go. In the best case scenario you do minimize dead weight loss and everybody benefits. Anybody who has ever taken any economics knows that. However, I don't think Greenspan's hands off approach has necessarily ever been good for the country. He's been hesitant to break up monopolies and his methods seem to have overwhelmingly helped old white men like himself. Yet on the other hand, if there is one thing that our country took out of the 30s, it was the fact that banks must be regulated. Just because a new type of banking has come into being under the guise of "financial institutions" does not mean that they should be able to bypass these laws. They still are in a very basic sense banks, so I think it is common sense that they should have had some regulation.
The root of the problem with this crisis though is that these new types forms of banking and investing such as derivatives popped up so quickly that nobody knew what to do with them. There is no historical evidence to go on and admittedly it would have been tough to convince the fed to do much of anything. But ultimately, I think Greenspan's continuous negligence with respect to these lending practices makes him much to blame for the crisis.
I know I sound like a bit of a bitch here because I'm sort of agreeing with both sides, it's just that I'm not totally sure that guys like Krugman were right to bring down the hammer on Greenspan because so many of his policies with respect to the problems that are causing our current economic crisis were the same policies that anybody in his position would have made.
So basically, I am hardly arrogant enough to claim the wisdom neccesary to apportion blame for this. The fed probably could have prevented this, but I am not sure who, given the authority, would have made the drastic policy changes to make them.
Sorry, not gonna check for spelling, grammer, or even logic of my ideas, just typing as fast as I can on an internet forum.
More important now than Greenspan though is Bernanke. One things for sure though, for better of worse his tenure of the chairmanship will go down in history as great. Not in the sense that everything he does is good but in regards to his exercising of open market operations on a level maybe not even matched by FDR. He'll either be regarded as a savior or burned as a failure but you certainly can't call him an empty suit. So what does everybody think about him?