Greenspan Corroborates

This morning on CSPAN Alan Greenspan was taped giving testimony about the financial crisis and it’s causes. He confirmed that it was the ability for banks to purchase Mortgage Backed Securities that was the essential cause of the problem, although he added one word which I neglected in my previous post, Sub-Prime Mortgage Backed Securities. Again, this was made possible because of the Grahm-Leach-Briley act, which dismantled the Glass-Steagal act of 1933, authored by Phil Grahm, John McCain’s shadow financial advisor.

He went on to say that there would have been some troubles in any case because of the housing bubble’s collapse, which would have occurred anyway. The crisis would have been far more slight, or perhaps not even labeled a “Crisis” had the gigantic amount of bad mortgages went tits-up: there still would have been banking collapses, but not the wholesale run on the international economy.

He stopped short of decrying free market deregulation, but implied that the ideology had failed him and that the 700BB bailout package was both required and up to the task of shoring up the markets, evidence is being seen already. He was also optimistic that, although there will be a rather severe “correction” (read recession, lots of gnashing of teeth and rending of shirts) that the economy will bounce back and that in due time, “investors will readdress their association with risk” ie., at some point, they’ll start investing in the stock market again.

Wow. Glad he cleared that up. :roll: