Greenspan Still Clueless on Moral Hazard

Greenspan displays his out-of-touch views on financial compensation below. He clearly does not understand, nor is he willing to admit the moral hazards created by his and Bernanke’s policies. The interviewer hints at the dangers, but is unwilling to call Greenspan out.

Popout

Interviewer: Haven’t we created a risk-free system, where whether you do well or not, you walk away rich? If that’s the case, shouldn’t there be some limits imposed? [he was discussing failed banks such as Lehman, Merrill, etc.]

Greenspan: “… compensation should be relative to a company’s peers… It’s not as though we’re using taxpayer funds”.

He chooses to ignore countless ways the finance industry receives special treatment. Low interest rates are designed to benefit banks first, not people. They cause inflation, lead to negative saving rates, and cause wild fluctuations in borrowing costs. This “allows” people to refinance when rates are low (if they can) which conveniently provides more fees for banks.

Comments

[Tony Petroski:]

Mr. Sharp. You're too sharp to linger in the past.

Oct 02 09:15 AM

[Asbytec:]

I saw that interview, I gotta tell ya, glad he's retired...left Bernanke holding the bag.

He mentioned, we need to be careful about (over) regulating a natural phenomenon in our economy. Something like (the crisis) only comes around once in a life time, every hundred years or so. The implication is, hey, we'll all forget about it like it never happened. Yea, until it happens to our kids.

Well, at least he's right about one thing. The depression was about a human lifetime ago. Maybe he's right, it seems out depression era regulations didn't help much. Na, me gotta nip this thing in the bud.

The term "natural" he used to describe the crisis struck me as odd. I understand what he means, but being "natural" doesn't make it the right thing to do.

Oct 02 09:41 AM

[notsosmart:]

the human will not admit faults. especially a guy like this. what puzzles me very much is why anybody bothers with him.i dont.let him fade away like a bad nightmare.

Oct 02 11:44 AM

[candooman:]

Greenspan does not learn his lessons .... like Jimmy Carter never learned that his idea that the poor should own a house regardless of their ability to pay their loans is wrong. I have yet to hear him acknowledge that this idea he pushed hard on when he was President (Community Redevelopment Act) was the one that eventually led to this whole crisis.

Oct 02 02:26 PM

[Adam Sharp:]

Thanks... But I think Bernanke is making even more extreme mistakes than Greenspan. So we need to learn from the past, and correct future actions.


On Oct 02 09:15 AM Tony Petroski wrote:

> Mr. Sharp. You're too sharp to linger in the past.

Oct 02 05:37 PM

[Asbytec:]

Mr Sharp, I agree and disagree. I agree near zero interest rates, QE, currency swaps, huge bonuses, alphabet soup programs (TARP, etc.), and bank bail outs are not the preferred method to get an economy going.

But, unfortunately, this is how you save the system as it stands today. And Bernanke has done what needed to be done under our current system, even though it's not what we'd like to see get done.

I'd argue the system, per se, needs fixing, by quite possibly eliminating the Fed removed or at least federalize it. Then, we might have better options to fix a recession, like Keynesian economics. (LOL@me) But, it might actually work, in such a case.

Watching the interview above, I see a big difference in Greenspan's loose money, mortgage your home to prosper philosophy. My bet is on Bernie tightening like a mad man as soon as inflation rears it's ugly head. (Yea, I said inflation is ugly.) He will almost have to, well...if he can. In as much as Greenspan is a mouth piece for the oligarchy, Bernanke may be, too.

On Oct 02 05:37 PM Adam Sharp wrote:

> Thanks... But I think Bernanke is making even more extreme mistakes
> than Greenspan. So we need to learn from the past, and correct future
> actions.

Oct 04 08:34 AM