Day of Reckoning

Not that he's looking for any sympathy from me, but I can't help but feel somewhat sorry for Alan Greenspan. He's certainly responsible for the poor decisions he's made over the years and the blind trust he seemed to put into the markets, but he's seeing the basic tenets of his beliefs being proven wrong right before his eyes. Here's how he explained it before Congress on Wednesday:

REP. HENRY WAXMAN: The question I have for you is, you had an ideology, you had a belief that free, competitive -- and this is your statement -- "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?

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ALAN GREENSPAN: 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.

REP. HENRY WAXMAN: You found a flaw in the reality...

ALAN GREENSPAN: Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

REP. HENRY WAXMAN: In other words, you found that your view of the world, your ideology, was not right, it was not working?

ALAN GREENSPAN: That is -- precisely. No, that's 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.

Greenspan was an acolyte of Ayn Rand, part of her personal circle. I don't know precisely how close his current ideology hews to Rand's objectivism, but most people presume that he hasn't strayed very far. And now Greenspan is shocked (and, I don't believe, in a Claude Raines/Louis Renault kind of way) that the world doesn't work the way he thought it did, the way he believed he'd always observed it to work. Nothing is as it seems. Instead of solving the economic problems we're facing, the free market is exacerbating them.

Even though I know that it's healthy to come to grips with reality and that people like Greenspan are responsible for their own disappointments, there's part of me that recognizes how devastating it can be to see one's system of belief fall apart in front of you. And that makes me sad for Alan Greenspan.