In one of the most pathetic comments I've ever heard from an alleged financial expert, former Federal Reserve Chairman Alan Greenspan told Congress Thursday that he was "shocked" at the depth of the breakdown in the U.S. credit markets.
If that's not bad enough, now Greenspan, who formerly opposed government regulation, has found government religion, as he is saying (under pressure) that he was "'partially' wrong in his belief that some trading instruments, specifically credit default swaps, did not need oversight."
While many big-government politicians are attempting to hide the government's direct culpability in the worldwide disaster, the only politician that understands what is going on, Ron Paul, had this to say about more government interference:
"In the midst of highly unpopular bailouts of Wall Street, many justifications have been given about why Washington feels the need to act. Some claim that capitalism and the free market are to blame, but we have not had capitalism. If you compare our financial capital to our aggregate debt, this would be obvious. In the same way, we have not had a truly free market. The monetary manipulations of the Federal Reserve, a complex tax code, the many 'oversight' agencies and their mountains of regulations show that we are far removed from a free market economy."
Additional regulation is being touted to hide the fact that all this is the fault of the government in the first place. Now they're making it look like the free market is the problem, when in reality it's the abandonment of the free market that has driven this fiasco.
To get more specific, Democrats are in particular to blame for this because they pressured Freddie Mac and Fannie Mae to offer the sub-prime loans to unqualified buyers, which when they did, overall led to this disaster. Now the outrageous Democrats are trying to add more regulation to the mix, setting the nation and world up for something worse in the future.
This is the old socialist idea that everyone needs to be equal: eqalitarianism. The problem is this is a false premise, and a idealistic notion that has failed over and over again in the past, as there is a reason many people aren't able to buy homes or other financially related things: they aren't able to manage the responsibility.
Get people with no personal financial management understanding or ability into a house they can barely afford, and you have set them up for failure; they don't even think in terms of repairs or outrageous increases in taxes.
Here's how Greenspan described what happened:
"Without the excess demand from securitizers, subprime mortgage originations -- undeniably the original source of crisis -- would have been far smaller and defaults, accordingly, far fewer.
"A surge in demand for U.S. subprime securities, supported by unrealistically positive ratings by credit agencies, was the core of the problem."
What did he just admit? He admitted that government pressure to get people in homes is the underlying problem of the credit crisis. That's what he really said in words most Americans won't understand, so he felt safe to say it.
The excess demand came from the lower interest rates instituted by Greenspan, and the demand came from government pressure, especially the Democrats, to get people in homes that normally wouldn't be able to afford it.
As far as Alan Greenspan goes, there went his legacy, and deservedly so.
A number of economists that understood the extraordinary dangers facing the economy because of Greenspan's decision to keep interest rates so low, and thus cave in to the pressure to bring them low enough (and terms loose enough) to get uncreditworthy people into homes, have been saying for years this disaster was going to happen, and evidently the financial celebrity didn't think he needed to heed the warnings.
The most dangerous and bizarre thing in all this, is the non-capitalist Federal Reserve, and by extension government, have been moving away from capitalism for years, unbelievably, in the name of capitalism. So now those that want to make the government even more powerful are lying and saying it's a failure of capitalism, when in fact it's a failure of an increasingly socialist-leaning U.S. government.
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