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Were You Wrong, Mr. Greenspan? "Partially."

The maestro has acknowledged that his music was off-key. Alan Greenspan, the former Federal Reserve chairman who led the economy through the years during which excesses in the credit and housing markets were building, is on Capitol Hill right now, reckoning with the events that led the nation into its current perilous shape.

Rep. Henry A. Waxman (D-Calif.) ticked off a long list of times that Greenspan, who was called the maestro in Bob Woodward’s book on his leadership of the Fed, extolled the ability of markets to properly price and manage risk.

“My question for you is simple,” said Waxman, in a hearing of the House Oversight Committee that he chairs. “Were you wrong?”

“Well, partially,” said Greenpan, before parsing the distinctions between different types of derivatives that might have been regulated better.

Later in the hearing, Greenspan acknowledged that he is being forced by this deep crisis to rethink some of his deepest assumptions and philosophy about how markets work.

Here is the entire, remarkable, exchange:

Greenspan: Well, remember that what an ideology is. It’s a conceptual framework with the way people deal with reality. Everyone has one. You have to. To exist you need an ideology. The question is whether it is accurate or not. And what I’m saying to you is yes, I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact. . .

Waxman: You found a flaw in the reality...

Greenspan: A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

Waxman: In other words, you found that your view of the world, your ideology was not right, it was not working.

Greenspan: Absolutely, precisely. You know, that’s precisely the reason I was shocked because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.

--Neil Irwin

By Sara Goo  |  October 23, 2008; 12:15 PM ET
Categories:  The Ticker  
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"You know, that’s precisely the reason I was shocked because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well."

Exceptionally well for whom? The Washington Elite. The Wall Street Elite. The CEOs, and Lawyers, and Lobbyists.

The ones formulating the response.

Obama has taken $450 Million Dollars. Our alternative is another US Senator worth Millions.

But the press is absorbed with Sarah Palin's wardrobe and Saturday Night Live.

Look in the mirror, Washington, New York, Boston, San Francisco.

The "system" has been working "exceptionally well" for you.

Because you outsourced our jobs, eliminated pensions, "downsized" everybody, instituted "pay for performance" for rank and file (But left golden parachutes for bosses who bankrupted the company) and told us to "do more with less."

The problem is Washington and New York.

Posted by: GreenHornet1 | October 23, 2008 12:27 PM | Report abuse

What makes me want to vomit is that Greenspan Et Al walk away rich, while the working man and woman are foreclosed. Obama was right, that it's obscene that someone with 7 homes can save 6 of them from bankruptcy, but the working man can't. But he lounges in a mansion.

We held up our end of the deal. We worked, we saved (at a half a percent return), we honor our contracts and our committments.

But your "subtle nuance" and escape clauses in everything from our pay to our products, you Washington-lobbyist led weasels back out of and walk away rich.

I hate Washington. I hate Wall Street. I hate big bankers, big insurance (here's my Katrina claim-denied), big medicine, and "globalist" traitors.

Posted by: GreenHornet1 | October 23, 2008 12:35 PM | Report abuse

This is why the Russians have Gulags.

Posted by: wesatch | October 23, 2008 2:59 PM | Report abuse

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