this is hilarious.
notice the rhetoric.
i strung together 3 versions of the same story from different sources to make it obvious what i think is so funny in this.
Quote:
Greenspan Concedes Error in Regulatory View
By THE ASSOCIATED PRESS
WASHINGTON (AP) — Alan Greenspan, the former Federal Reserve chairman, said Thursday that the current financial crisis had uncovered a flaw in how the free market system works that had shocked him.
Mr. Greenspan told the House Oversight Committee on Thursday that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had proven in the latest crisis to be wrong.
Mr. Greenspan said he had made a “mistake” in believing that banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions.
Mr. Greenspan said that he had found “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”
Mr. Greenspan, who headed the nation’s central bank for 18.5 years, said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a “state of shocked disbelief.”
He said that the current crisis had “turned out to be much broader than anything that I could have imagined.”
The committee called Mr. Greenspan to testify along with former Treasury Secretary John Snow and the Securities and Exchange Commission chairman, Christopher Cox, as lawmakers sought to discover if regulatory failings had contributed to the crisis.
The committee chairman, Henry Waxman, said that he believed that the Federal Reserve, which regulates banks, the S.E.C. and the Treasury had all played a role in contributing to the mistakes.
“The list of mistakes is long and the cost to taxpayers is staggering,” Mr. Waxman, a California Democrat, told the three men. “Our regulators became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite. The mantra became that government regulation is wrong. The market is infallible.”
In his testimony, Mr. Greenspan blamed the problems on heavy demand for securities backed by subprime mortgages by investors who did not worry that the boom in home prices might come to a crashing halt.
“Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,” Mr. Greenspan said. “Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity.”
Mr. Greenspan said that a necessary condition for the crisis to end will be a stabilization in home prices but he said that was not likely to occur for “many months in the future.”
When home prices finally stabilize, Mr. Greenspan said, then “the market freeze should begin to measurably thaw and frightened investors will take tentative steps towards re-engagement with risk.”
Mr. Greenspan said until that occurs, the government is correct to move forward aggressively with efforts to support the financial sector. He called the $700 billion rescue package passed by Congress on Oct. 10 “adequate to serve the need” and said that its impact was already being felt in markets.
Mr. Greenspan did not specifically address the criticism he is receiving now as being partly to blame for the current crisis.
Mr. Greenspan’s critics charge that he left interest rates too low in the early part of this decade, spurring an unsustainable housing boom, while also refusing to exercise the Fed’s powers to impose greater regulations on the issuance of new types of mortgages, including subprime loans. It was the collapse of these mortgages and rising defaults a year ago that triggered the current crisis.
In his testimony, Mr. Greenspan put the blame for the subprime collapse on overeager investors who did not properly take into account the threats that would be posed once home prices stopped surging upward.
“It was the failure to properly price such risky assets that precipitated the crisis,” Mr. Greenspan said.
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http://www.nytimes.com/2008/10/24/bu...hp&oref=slogin
from the washington post lead:
Quote:
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Former Federal Reserve chairman acknowledges that the financial crisis had exposed "a flaw" in his view of how the world and markets function.
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from the cnn lead:
Quote:
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In remarks to the House Oversight and Reform Committee, Greenspan explained that "we are in the midst of a once-in-a century credit tsunami."
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so there was a "flaw" in greenspan's thinking--which is that reliance on "self interest" (what exactly is that?) was adequate---instead of oversight, instead of regulation--for the "rational operations" of these fictions called "free markets"....but is a flaw at the level of axiom just a flaw?
this is one of the central television high priests of neoliberalism effectively renouncing the ideology itself.
"i was wrong."
it's an interesting moment.
but notice the ways in which the accounts are written: passive voice---words that minimize the implications of what is being said (there was a mistake, there were flaws) coupled with rhetoric---again--of weather (a "credit tsunami" a natural disaster, part of a "perfect storm"...)
why is this interesting? in part because the dominant ideology of things economic, neo-liberalism, the "washington consensus," the "market fundamentalism" that is falling apart was also the lingua franca for expressing information and perspective on things economic in the american mainstream press. as this ideology gets pulverized, the extent to which the american "free" press is little more than an ideological relay system becomes more and more obvious. and with that, the contours of the soft authoritarian system of which neoliberalism was a central element become more and more evident---if you look.
you see parallel stuff with reference to the implosion of the cowboy capitalist financial system as well---have a look at this:
http://www.nytimes.com/2008/10/23/bu...l?ref=business
which came out this morning (13/23/08) in a context that is obviously being shaped by the ONGOING crisis, and which refers to it entirely in the past tense.
i put all this stuff together--and i could continue with it---to point out what ideological crisis looks like. ideological crisis in this sense is bigger than political trouble---it affects the shared frame of reference that shapes political action for both mainstream political parties, and for the relay functions undertaken by the press, which at all times has to balance the requirement to legitimate the overall political arrangment against its own requirements, which boil down to maintenance of a sense of distance from this ideological function in order to legitimate that function by enabling it to appear NOT as a function, but as the neutral relay of infotainment.
within this, the conservative media apparatus functions as an extremist counterpoint, taking this ideological justification function to a kind of limit by collapsing explicitly reactionary political opinions into the information itself and the whole unseemly stew this creates into a sense of identity---to be conservative is to think this way.
but this ongoing---uh----problem which follows from the "flaws" in thinking particular to the neoliberal worldview and which the weather is now pulverizing...this is interesting.
they say that folk make history every day, and that's true. but we live in a social system--a system of systems---and these systems have what you might think of as higher-order (in the sense of bigger, scale-wise) processes and events that unfold within these processes that are usually associated with History in caps. i think that's what we're living through...a historical mutation of the capitalist system, an ideological mutation, a political faction mutation, a realignment---in the context of which nothing is given in advance and in a context shaped by the inability of folk to see clearly because the frame they use to see is the frame that is being imploded.
i wrote the above while eating a brownie in my office. it's more or less how i've been thinking about the phase through which we are passing now.
maybe you've had a bit of time to acclimate and think about thi s as if from a remove as well.
if you haven't, i recommend eating a brownie and thinking about what's going on in the economic sector of the social world. think big:
what do you think is going on?
where do you see this heading?
how are you holding up through it?
remember that old cliche---i repeat it alot---may you not live in interesting times.
well, these are interesting times.