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Who Messed Up the Economy? (video)

Nov 5, 2008
Michael Hogan

Alan Greenspan had to eat humble pie before the U.S. Senate. The former Fed Chairman held interest rates too low for too long and failed to regulate the banks subprime lending and their creation of mickey mouse financial instruments like CDO\'s (Collateralized Debt Obligations) and other worthless paper. Greenspan admitted his 40 year long belief in the "unseen hand" guiding self regulated markets that rely on bankers to do what is in the best interests of their clients was an illusion. It was sad to see a grown man suddenly realize his professional life was an ideological mistake - self regulation is no regulation.

Treasury Secretary Henry Paulson is the other bad actor in the Mr Mess Up parade. In the 1990\'s he convinced President Bill Clinton to allow investment banks that were borrowing with 10% down (10 to 1) to borrow with 2.5% down (40 to 1). Hank Paulson was the CEO of investment bank Goldman Sachs at the time. Retail stock purchasers who wish to buy on margin must put 50% down (2 to 1). In the American meritocracy the main mess ups get the best jobs. That is how Hank became Secretary of the Treasury. And so it goes. Al & Hank created the biggest financial bubble since the 17th century tulip bubble in Holland. Al & Hank are bubble heads. 

View the video clip here:

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