On October 23, 2008, Alan Greenspan testified before the House Oversight Committee. This is part of what he said - pay particular attention to what he says at about 5:36 til the end of the video - it only takes a minute for him to go to Wonderland.
https://www.youtube.com/watch?v=R5lZPWNFizQ
In 2010, Alan Greenspan explained away the Great Recession of 2008 in his testimony before the Financial Crisis Inquiry Commission.
This is part of what he said. It appears on page 7,
"For almost a half century, we have depended on our highly sophisticated system of financial risk management to contain such market breakdowns. That paradigm was so thoroughly embraced by academia, central banks, and regulators that by 2006 it became the core of global regulatory standards (Basel II).
The risk management paradigm nonetheless harbored a fatal flaw. In the growing state of euphoria, managers at financial institutions, along with regulators including but not limited to the Federal Reserve, failed to fully comprehend the underlying size, length, and potential impact of the so-called negative tail of the distribution of risk outcomes that was about to be revealed as the post-Lehman Brothers crisis played out. For decades, with little to no data, almost all analysts, in my experience, had conjectured a far more limited tail risk. That led to more than a half century of significantly and chronically undercapitalized financial intermediaries, arguably the major failure of the private risk management system."
Yes, Alan said that. He said a lot more as well. Here's the full text of his testimony.
https://fcic-static.law.stanford.edu/cdn_media/fcic-testimony/2010-0407-Greenspan.pdf
Greenspan's 2008 testimony left me speechless. It basically boiled down to "We don't know what planet we're on."
Turns out, that's true. It's at the core of what Greenspan and all the rest of them got wrong.
We live on Earth. Earth is a wonderful planet with finite resources and we've been abusing it sorely and pretending its resources are infinite.
The other thing these boys got wrong is that they believe it's okay for a small percentage of wealthy people to amass all the wealth and forget about all the people who have nothing.
They simply ignore things like climate change, poverty, plague, global warming, trends toward fascism, etc.
I'm not an economist. I have nothing invested in the stock market. Having said that, I knew we were in big trouble in 2,000 and predicted economic disaster in some of my online posts and letters to the editor.
My favorite essay was titled, "Your House Isn't Worth More, Your Money Is Worth Less".
Since Trump was elected, I've been complaining about the banks and financial institutions whenever I get the chance - not that anybody is listening to me. I just like to go on record in an attempt to warn people when things are going bad.
I've had a slow, understated critique of the market and our economy going on Twitter for quite a long time. A few months ago, someone suggested I read "Doughnut Economics" by Kate Raworth.
I did. I will be forever grateful for the suggestion and to Kate Raworth.
For starters, Kate knows what planet we're on. She's aware of Earth and she's aware of what we've been doing to it.
Kate is also keenly aware of all the people on the planet and the consequences of writing anyone off.
She came up with an economic theory that takes it all into account. She even drew a picture so we could grasp it more easily. The picture looks like a doughnut - hence the title of her book and what she calls her theory.
*** Spoiler Alert *** There's none of Alan Greenspan's word salad in the book. Kate is very easy to understand. She explains things using everyday language.
For those who want a fuller explanation, Kate reviews economic theory from its origins to present day. Yeah, reading this book is like taking a Introduction To Economics course.
Kate explains things like GDP and growth and how we've been basing our political economic strategies on theories that are using the wrong paradigm.
She explains how exponential growth is impossible to sustain in a real world scenario - this pertains to those of us on Earth in 2021.
"It starts with recognizing that every economy - local to global - is embedded within society and within the living world." This appears on pg. 244.
If your tired of hearing the same old, regurgitated tripe that has gotten us to the brink of economic ruin several times and now has us on the brink of extinction and misery, read this book.
If you're studying economics you should already be reading it. If you're not you're in the wrong program. If you're thinking of studying economics, you might want to make sure you attend a school that understands what Kate is saying and includes it in the curriculum.
Here's an easy way to get acquainted with Kate.
https://www.youtube.com/watch?v=Rhcrbcg8HBw
Holy Moly!
