Selfish Desserts

I must confess that I am not much of a fan of Ayn Rand. I'm sure that if she was still around, the feeling would be mutual. Yeah, I read Atlas Shrugged and The Fountainhead in High School but there was always something well, "creepy" about her tenets. Yet I have developed a strange talent in my life for picking out her adherents. I will never forget the time when I was in college working at my dad's condo complex and his ace salesman with the 280Z and I had a conversation about literature. He asked for me to guess his favorite author and bingo. It's really not that hard, you just pick out the most selfish, predatory people you have ever met and figure out who they would pick as a literary mentor that might endorse their avarice.

Well the biggest Rand loonie of them all fell on his sword at the House Oversight Committee meeting this morning. Speaking in front of Henry Waxman, Allan Greenspan conceded that there was an oversight and critical failure in his economic rationale that led to the collapse of the American economy.



From A.P.:

Mr. Greenspan told the House Oversight Committee on Thursday that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had proved to be wrong.

Mr. Greenspan said he had made a “mistake” in believing that banks operating in their self-interest would be enough to protect their shareholders and the equity in their institutions.

Mr. Greenspan said that he had found “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”

Mr. Greenspan, who headed the nation’s central bank for 18.5 years, said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a “state of shocked disbelief.”

I would not bet my money on Futurists who believe that people will look after other people's interest voluntarily.

Mr. Greenspan did not specifically address the criticism he is receiving now as being partly to blame for the current crisis.

Mr. Greenspan’s critics charge that he left interest rates too low in the early part of this decade, spurring an unsustainable housing boom, while also refusing to exercise the Fed’s powers to impose greater regulations on the issuance of new types of mortgages, including subprime loans. It was the collapse of these mortgages and rising defaults a year ago that led to the current crisis.

In his testimony, Mr. Greenspan put the blame for the subprime collapse on overeager investors who did not properly take into account the threats that would be posed once home prices stopped surging upward.

“It was the failure to properly price such risky assets that precipitated the crisis,” Mr. Greenspan said.

I think it's great that he can assess the situation with such a clinical calmness. No mention of his push for ARM loans and leveraging. By the way, The Ayn Rand Center for Individual Rights has an inaugural event coming up where they will explain how our crisis is the result of people not being selfish enough. Apparently Laissez Faire capitalism is the only way to right our ship. As they say, timing is everything...