Alan Greenspan: Now There's Chutzpah!

If you recall, I presented Countrywide (CFC) CEO Angelo Mozillo with a tongue in cheek “Chutzpah” award for his blaming the U.S. government for not doing more to stem the mortgage crisis, as it’s the very crisis he helped create. Mozillo’s comments were a textbook example of Chutzpah, right up there with the all time classic being someone who murders their parents and asks the court for leniency since he’s now an orphan. Well, after reading an article in today’s NY Times, I think we have a new “Chutzpah” champion.

Obviously, the new champion is none other than Alan Greenspan whose article in today’s WSJ blamed everyone and everything for the credit crisis, well…everything except cheap money and a lack of oversight of the U.S. mortgage market by the Fed. It would’ve been one thing if Alan just blamed others for the credit crisis, but even went so far as to say:

From the Wall St. Journal:

The crisis was thus an accident waiting to happen. If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market. As I have noted elsewhere, history has not dealt kindly with protracted periods of low risk premiums.

I had to read the above paragraph twice, because it was Alan’s policies that help create an environment of “low risk premiums” in the first place! Even more egregious is the fact that Alan Greenspan often argued that there simply couldn’t be a housing bubble, in fact a WSJ article from Monday noted:

Former Fed Chairman Alan Greenspan frequently argued there could be no housing bubble. The high cost and inconvenience of moving "are significant impediments to speculative trading and...development of price bubbles," he said in late 2004.

So let me get this straight:

When he was Fed Chairman he was claiming the housing bubble (a subset of the larger credit bubble) didn’t exist, and now he’s calling the credit crisis (the blow-back from a credit bubble) an unavoidable accident? I’m sorry Mr. Greenspan you can’t have it both ways, you can’t paint the situation as being “an accident waiting to happen” caused by others and not take ownership of your role in creating it, especially when you were previously in denial about various components of it.

CHUTZPAH!

I understand that Al probably doesn’t enjoy being made the scapegoat for the credit crisis as it wasn’t entirely his fault; however he’s hurting his credibility by not taking ownership of his role in the crisis and laying the blame at the feet of others. Not to mention making himself an easy target of Bloggers, some of whom were just entering the sixth grade when Al became the Fed Chairman.

There is a lot of convenient doublespeak now that we’re in the midst of what is likely to be a protracted credit crisis and it worries me (quite frankly) a lot more than the credit crisis itself. It’s not just Alan Greenspan either, a lot of commentators, financial columnists, analysts, et al, who were touting the long-term strength of the housing boom are now preaching doom and gloom. If the people who helped create the problem and were in denial about its existence until the last minute are allowed to point fingers and offer solutions, how are we ever going to get make our way out of this mess?

Sources:

The Wall St. Journal: “The Roots of the Mortgage Crisis” – Alan Greenspan, December 12, 2007

The Wall St. Journal: “U.S. Mortgage Crisis Rivals S&L Meltdown” -- GREG IP, MARK WHITEHOUSE and AARON LUCCHETTI – December 10, 2007.

Comments

[marvin gortler]

The housing bubble and credit crisis was unavoidable due to the fierce resistance by the financial institutions to any oversight and regulation of the credit markets. Let the "Market do it's job" was the mantra. The Market ie the financial institutions, lenders, banks, brokers etc. failed miserably to regulate themselves and should be held accountable.

[chagrinned1]

Thankfully you have figured our Alan's approach. Huzzah!!

[fodi MD.]

There is no question Alan Greenspan was incompetant. Now because he is a member of the arrogant privileged class,he travels arround making huge sums of money still using fedspeak!