Those in a state of shocked disbelief rarely think rationally...
Committee of Government Oversight and Reform
October 23, 2008
Henry A. Waxman, Chairman
Notes:
Alan Greenspan was Federal Reserve Chairman for 18 years. During that time he was the most listened to and influential economist in the world. How could he be so absolutely shocked and blindsided by the major bubble collapse since the Great Depression?
Part of the problem is that Greenspan's world view was shaped and dominated by pre Internet thinking. Anything that did not fit into his system of analysis was not merit attention. The system of analysis itself, even when it did include relevant factors was not equipped to see the implications for a Post Internet world - or world view.
Full text of Dr. Greenspan's prepared text:
Committee of Government Oversight and Reform
October 23, 2008
Henry A. Waxman, Chairman
Dr. Greenspan:
"I have found a flaw. I don't know how significant or permanent it is. But I have been very distressed by that fact."
Mr. Waxman:
"In other words, you found that your view of the world, your ideology, was not right, it was not working."
Dr. 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."
"I have found a flaw. I don't know how significant or permanent it is. But I have been very distressed by that fact."
Mr. Waxman:
"In other words, you found that your view of the world, your ideology, was not right, it was not working."
Dr. 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."
Notes:
Alan Greenspan was Federal Reserve Chairman for 18 years. During that time he was the most listened to and influential economist in the world. How could he be so absolutely shocked and blindsided by the major bubble collapse since the Great Depression?
Part of the problem is that Greenspan's world view was shaped and dominated by pre Internet thinking. Anything that did not fit into his system of analysis was not merit attention. The system of analysis itself, even when it did include relevant factors was not equipped to see the implications for a Post Internet world - or world view.
Dr. Greenspan:
"As I wrote last March: those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity (myself especially) are in a state of shocked disbelief..." Allen Greenspan pg 1prepared text
"What went wrong with global economic policies that had worked so effectively for nearly four decades?"
"A Nobel Prize was awarded for the discovery of the pricing model that underpins much of the advance in derivates markets. This modern risk management paradigm held sway for decades".
Full text of Dr. Greenspan's prepared text:
Committee of Government Oversight and Reform
October 23, 2008
Word Count: 1,133
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