Two weeks ago, I wrote a blog post saying if any public official in the U.S. ought to be blamed for the current mess in the financial markets, it ought to be Alan Greenspan, the former Chairman of the Federal Reserve. A couple of days ago, at a Congressional hearing, Greenspan admitted that he had made mistakes, while stopping short of taking full responsibility. He also admitted that he had failed to take action earlier for idealogical reasons, believing that the markets would be self-correcting.
It’s a bad time to believe in capitalism. As a poster on QT3 remarked, Greenspan was “like BFF with Ayn Rand and everything”. Hopefully, I’ll have time to write a spirited defense of capitalism next week.
This is as good a time as any to post a link to Sad Guys on Trading Floors, a photo collection of traders’ reactions to the continuing financial meltdown. The U.S. Federal Reserve just dropped the federal funds rate by 0.5 percent to 1.5 percent, while central banks around the world followed suit, and the markets still dropped. The U.S. Treasury stated that it might have to take ownership of U.S. banks and U.S. House Speaker Nancy Pelosi has just announced a proposal for yet another stimulus package worth US$150 billion to be spent in a Keynesian attempt to jump start the American economy. All of that is just today’s news.
Remember how AIG was bailed out by the U.S. government to the tune of US$85 billion just a couple of weeks ago and needed another US$37.8 billion yesterday? A report today details a week long “conference” organized by the world’s largest insurer for its top agents at a five-star resort in California costing more than US$400,000.00 just a few days after the first bailout. As the saying goes, we live in interesting times.
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The unexamined life is a life not worth living