Gene Lyons: Idealism Takes A Hit

[mooseandsquirrel]

http://moose-and-squirrel.com/gene/gene.html

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Last week’s ritual humiliation of former Federal Reserve chairman and free market guru Alan Greenspan by a committee of grandstanding congressmen would be sad if not so richly deserved. A free-market zealot as deluded as the woolliest Marxist English professor, Greenspan professed himself horrified by the gigantic Ponzi scheme constructed by Wall Street mortgage lenders and investment banks. Poor fellow, he’d evidently never paused to consider why banks need armed guards.

First appointed by (who else ?) Ronald Reagan, Greenspan admitted putting too much faith in the theoretical ability of free markets to magically regulate themselves.

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m&s

[The Backlash Cometh]

1. Greenspan found a flaw. Why isn't it being reported from the hightest mountain?

Here are my favorite quotes:

“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he confessed. Evidently, the oracle persuaded himself that bankers wearing $ 2, 000 suits and $ 500 shoes were too high-minded to steal.

Democrats reminded Greenspan that he’d had the legal authority to prevent irresponsible lending practices but refused to use it, despite increasingly dire warnings from economists outside the government of an unsustainable speculative housing bubble. Perennially indignant Rep. Henry Waxman, D-Calif., put it to him directly: “Do you feel that your ideology pushed you to make decisions that you wish you had not made ?”

“Yes, I’ve found a flaw,” Greenspan conceded. “I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

[Cresent City Kid]

2. This is the flaw with trickle-down in general

The wealthy don't "create" wealth, they aquire it from consumers. If they were logical and acted in their best interests, they would seek to create a more successful middle class and even a bigger middle class by allowing more of the poor to move up and join it. Much like commercial fishing operations who have fished themselves out of business, the wealthy have overfished the economy for short term gain.

[MonteLukast]

3. There's idealism, and then there's idealism.

Another good thing the Obama candidacy has done is shown us an example of constructive idealism (hope coupled with effective work for the common good) in contrast to destructive idealism (magical thinking).

In fact, over the last few years, the tone of magical thinking became more and more, "Believe in fairies, dammit!" Exemplified, of course, in this infamous statement:
"We're an empire now, and when we act, we create our own reality. We're history's actors, and you, all of you, will be left to just study what we do."

[Miss Authoritiva]

4. Unsurprisingly....

And guess what. According to Newsweek business columnist Daniel Gross, it turns out that while minority homeowners actually have very good records of paying off mortgages, “lending money recklessly to obscenely rich white guys, such as Richard Fuld of Lehman Bros. or Jimmy Cayne of Bear Stearns, can be really risky.”