Beware of whoever becomes the next 'Supreme Authority'. - Ed.
His 18-year term as chairman of the US Federal Reserve was already under scrutiny because of the crisis rocking the international economy. But Alan Greenspan’s admission last Thursday that his resistance to greater regulation of the credit industry had been a mistake, and that he was “shocked” by developments, was heavy in symbolism: The man who was considered responsible for the flourishing economy of the past two decades, the key player in the world’s largest economy, admitted that he did not know as much as we thought he did. Testifying before the House Committee on Oversight and Government Reform, Greenspan, whose term ended in 2006, confessed that his ideology (of a free market needing no external restraint) may have mislead him. “That’s precisely the reason I was shocked, because I’d been going for 40 years or so with considerable evidence that it was working exceptionally well,” he said. “I made a mistake in presuming that the self-interest of organizations, specifically banks, is such that they were best capable of protecting shareholders and equity in the firms… I discovered a flaw in the model that I perceived is the critical functioning structure that defines how the world works.” This raises the question: If Greenspan did not know how the world works, who knows where we are headed now?
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