Now he starts having ideas. I did not hear him make a peep when the largest and most problematic of these banks (Citigroup) was created and when they had to have a complete overhaul of the nations banking laws to create that particular bank. No, he actively supported the new laws intended to create citigroup and which also resulted in another bunch of oversized financial institutions including AIG.<p>And later he guaranteed bank profits by lowering interest rates whenever banks were in just a little bit of trouble. The inevitable result was an asset bubble and rates so low that when we had an actual crisis, the fed could not do anything.<p>But now, when he is out of power, he finally figures out that the existence of banks that are so large and powerful that they can get the government to ensure their profitability might not be good for the free market after all. Good job!
Wow, Greenspan just won a bunch of points in my book.<p>> while “just really arbitrarily breaking down organizations into various different sizes” goes against his philosophical leanings, something must be done to solve the too-big-to-fail issue.<p>I have the same sentiments.<p>> “Failure is an integral part, a necessary part of a market system,”<p>I agree.<p>> “If you start focusing on those who should be shrinking, it undermines growing standards of living and can even bring them down.”<p>I think his proposal is one we should act on.
Greenspan is the poster boy and enabler of this thing. Way back in June 2005 I registered <a href="http://AlansBubble.com" rel="nofollow">http://AlansBubble.com</a> to memorialize him. Sadly, but not surprisingly, this same "bubble ==> crash ==> bailout" will happen again in the not too distant future, except it will be bigger.<p>What can be done? Here are some ideas from Nassim Nicholas Taleb: "Ten Principles for a Black Swan-proof World": <a href="http://chrisco.wordpress.com/2009/06/10/ten-principles-for-a-black-swan-proof-world/" rel="nofollow">http://chrisco.wordpress.com/2009/06/10/ten-principles-for-a...</a> (see also the Nouriel Roubini links there)
The problem is that they will be broken up "poorly". The bigwigs will keep the good parts, and give the crappy, debt-ridden parts to the government, or let them fail.<p>Kinda like GM (although I'm not sure there were any good parts).
I strongly believe it is time now to regulate market capitalization to twice their quarterly revenue. I have petitioned SEC which is actively considering it.
Every time I hear or read what Greenspan says I become more and more convinced that his goal is to bring down the system ala Atlas Shrugged style. These are not the words of an objectivist, they are the words of a statist. Or, at very best, an extremely pragmatic capitalist. Dude is trying to bring down the whole Money as Debt and Corporatism system in on swoop.<p>Note to the strikers: Bring me with you.
Honestly, I'm more than happy with my bank (JP Morgan/Chase) staying as one big conglomerate. They certainly proved they knew what they were doing during the crisis and have managed to stay on top of things. The government doesn't have the right to punish private corporations for being too good, too smart, and too successful; though they have a huge track record of trying to do so.