Humble Pie Chart
You turn if you want to. They did …
Chairman of the US Federal Reserve, 1987-2006; knighted by the Queen in 2002 for his "contribution to global economic stability"
"What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so. We think it would be a mistake [to more deeply regulate the contracts]."
"Not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient."
"I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk … But I believed then, as now, that the benefits of broadened home ownership are worth the risk."
"It seems superfluous to constrain trading in some of the newer derivatives and other innovative financial contracts of the past decade. The worst have failed; investors no longer fund them and are not likely to in the future."
US Congress hearing, 23 October 2008
REPRESENTATIVE HENRY WAXMAN: [Mr Greenspan, you said:] "I do have an ideology. My judgment is that free, competitive markets are by far the unrivaled way to organize economies. We've tried regulation. None meaningfully worked." That was your quote.
You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others. And now our whole economy is paying its price.
Do you feel that your ideology pushed you to make decisions that you wish you had not made?
GREENSPAN: Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to – to exist, you need an ideology. The question is whether it is accurate or not.
And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.
WAXMAN: You found a flaw in the reality …
GREENSPAN: Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
WAXMAN: In other words, you found that your view of the world, your ideology, was not right, it was not working?
GREENSPAN: That is … precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.
Free-market champion and former Head of Policy at the Institute of Directors
Spare us the meddlers (The Guardian, 10 April 2008)
"For all the problems in the interbank markets, British banks are solvent, they are still making profits and they are still paying dividends. Fingers have been burned and, hopefully, lessons have been learned. The British banking system is not collapsing and confidence will surely return.
"Inevitably, the combination of banking bailouts and chief executives walking away with generous payoffs, leads to calls for more regulations. But, in Britain at least, this should be resisted. We have regulations aplenty. More regulation risks damaging innovation and entrepreneurial activity that are vital to the success of the City of London, a vital part of the British economy.
"Instead boards of financial institutions must focus on the long-term prosperity of their businesses and ensure that remuneration packages for key employees balance short-term, performance-related reward with longer term business objectives. These are corporate governance issues that should be left to boards and shareholders."
The rescue plan is bold and welcome (The Guardian, 8 October 2008)
"The banking sector, love or hate it, is a vital part of the economy and uniquely has the ability to wreck the rest of the economy. We are living in desperate times and there has been a critical need for radical, prompt measures. The government has, after some nerve-racking dithering, responded.
"The Treasury's rescue plan has, rightly, grasped this issue square on. And the £50bn of capital that the government is making available to the banking system (and building societies) is a bold move that should be sufficient to keep the banking system functioning in these challenging times.
"The government's rescue plan, by providing much-needed capital as well as unlimited liquidity, should underpin confidence in the solvency of the banks. It is a major step towards the normalisation of the banking system and the necessary unfreezing of the credit markets."
Economic Secretary to the UK Treasury, 2006-07
“The Government’s interest in this area [London Stock Exchange regulation] is specific and clear: to safeguard the light touch and proportionate regulatory regime that has made London a magnet for international business...
"[Legislation will] outlaw the imposition of any rules that might endanger the light touch, risk-based regulatory regime that underpins London's success. We remain open to overseas investment that will continue to be able to benefit from our regulatory regime."
"Those people who think that the global market can be run without regulation, or with self-regulation, or with light-touch regulation have been entirely routed, have been entirely disproved."
Senior economic advisor to John McCain's 2008 presidential campaign; director of economic policy studies, American Enterprise Institute
"The Dow should rise to 36,000 immediately, but to be realistic, we believe the rise will take some time, perhaps three to five years."
Various years since
"No, the Dow is not at 36,000 right now …"
Note: Hassett made his 1999 prediction in his bestselling book, Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market, co-authored by another American Enterprise Institute fellow, James Glassman.
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Associate Editor and Principle Economic Commentator, The Times
"I believe that the global credit crisis, far from taking a turn for the worse, is now almost over … There will be no US recession … Stock markets around the world will rise in 2008 …"
"Although I initially underestimated the depth and duration of the global credit crunch …"
Exchequer Secretary to the UK Treasury
"The Liberal Democrat motion has been much commented on, possibly because it reads like the storyboard for 'Apocalypse Now', or perhaps even 'Bleak House'. According to the motion, we are facing an 'extreme bubble in the housing market' and the 'risk of recession', and we must 'act to prevent mass home repossessions...
"Fortunately for all of us, however, that colourful and lurid fiction has no real bearing on the macro-economic reality...
"Now that we have had 'Apocalypse Now' and 'Bleak House', I am going to talk about 'An Inconvenient Truth', which is that the economy is strong and stable...
"Because our economic fundamentals are right, we can look forward with reasonable expectation to getting out of this situation. The housing situation will be unwound in a relatively calm and orderly way, which is what people need to know."
"Obviously, this tough economic climate creates challenges for us all. The effects of the global economic crisis have filtered down from major financial institutions to families across the country …"