I only slept for 3 hours or so and couldn't get back to bed. Woke up to Ole' Greenspan running his pie hole. He may be right, but such irony, as he provided the rocket fuel for the very problem he speaks of with such conviction now. Greenspan Sees Many Casualties From Crisis: Report By REUTERS Published: March 17, 2008 Filed at 5:02 a.m. ET http://www.nytimes.com/reuters/business/business-economy-greenspan.html?_r=1&oref=slogin LONDON (Reuters) - There will be many casualties from the unfolding financial market crisis, which will lead to a large-scale overhaul of international banking regulations, codes and risk management, former Federal Reserve Chairman Alan Greenspan said. Writing in the Financial Times, the former Fed chief said much of the financial system's risk-valuation models failed, not because they were too complex but because they were "too simple to capture the full array of variables governing that drive global economic reality." "The crisis will leave many casualties. Particularly hard hit will be much of today's financial risk-valuation system," he wrote. While insisting that current risk management models and econometric forecasting methods remain "soundly rooted in the real world," he said risk management can never be perfect. "It will eventually fail and a disturbing reality will be laid bare, prompting an unexpected and sharp discontinuous response," Greenspan said. He added, however, that he hoped one of the casualties from the worst U.S. financial crisis since World War Two would not be the spirit of broad self-regulation within financial markets. Although he said the Basel II international banking regulatory framework would almost definitely be revamped and financial institutions' financial models would need to be re-drafted, Greenspan warned against over-regulation. "It is important, indeed crucial, that any reforms in, and adjustments to, the structure of markets and regulation not inhibit our most reliable and effective safeguards against cumulative economic failure: market flexibility and open competition," he said. OBLIGATORY GREENSPAN DIG -
Kind of ironic this comes from the same guy who praised the packaging/slicing/dicing of diversified mortgage debt as a big innovation in risk management
Isn't it, though? I mean, this guy is such a wanker. Seriously, I know a lot of people masturbate to his poster and everything, and think he was so brilliant, but in reality, he helped in no small way to create this problem. He then spoke (as you said) lovingly of derivatives for a long, long time - and now he wants it both ways, saying such instruments are part of the financial community's undoing.
To be honest, I can't believe what Greenspan is saying. Any "normal" human being would feel ashamed for doing a complete 180 degree turn and running their mouth on the mess they created in the first place. The guy must be nuts, maybe dementia is getting the best of him.
Remember when the Queen knighted GreenScam? Knighted, HELL... SHOULD HAVE BEEN INDICTED! Remember a few years back when some ET'ers were singing the praises of Greenie? And there he was.. the greatest financial criminal in the history of the civilized world. Dare I say it.... The Hitler of Finance?
"He added, however, that he hoped one of the casualties from the worst U.S. financial crisis since World War Two would not be the spirit of broad self-regulation within financial markets." Why does this make me think of Kruschev's remark about "It is like sending a goat to tend the cabbage" Of course none of this current calamity has anything to do with Greenspan, I mean how could it? He had already left office when this started. I mean really, I hope he ends up in a dock on trial rather than giving $100,000 after dinner speeches.
Its funny, in today's Financial Times (London Edition) Mr Alan Greenspan has almost a full page article he has written which includes some interesting statements "...How did we go so wrong ? As complex as they are,our systems - both risk and econmetric - are too simple..." http://www.ft.com/cms/s/0/edbdbcf6-f360-11dc-b6bc-0000779fd2ac.html?nclick_check=1 All l can say is,how did you get it so RIGHT you have given us trading opportunities which we may never see for another decade....