One of the economy’s Terminators is back, bringing Ayn Rand and memories of mid-20th century movies with him.
Preparing to testify before the Financial Crisis Inquiry Commission, Alan Greenspan reaffirms absolute faith in his mentor’s me-first market philosophy in “The Fountainhead” and adds a note from “Dr. Strangelove.”
Asked if the meltdown disputes Rand’s theories, Greenspan says no, it was not the fault of free markets, that “the major mistake was assuming what the nature of risk would be. And the reason it was missed is we have had no experience of the type of risks that arose following the default of Lehman Brothers in September 2008.
“That’s the critical mistake. And I made it. Everybody I know who works in this business made it.”
This is straight out of “Strangelove” in which a clueless general defends the fail-safe system that has allowed impending nuclear destruction of the planet: “I don’t think it’s quite fair to condemn a whole program because of a single slip-up.”
Beyond that, Greenspan should read Michael Lewis’ new book, “The Big Short” and enlarge his circle of acquaintances to include those described therein who foresaw the bursting of the mortgage bubble and profited from it.
To make financial reform “fool-resistant,” Congress will have to go beyond conventional wisdom and put restraints on the money manipulators that really work.