Having a good economic advisor on the ticket will be a plus this year.

If the former Fed Chairman says it was at the edge of their authority, he implies that it was still within it, no?

I'll sleep good tonight knowing everything was barely on the up and up.

Related, from the Financial Times

FT.com | Economists' Forum | Alan Greenspan: A response to my critics

Alan Greenspan: A response to my critics

from the comments:
"Willem Buiter: Mr Greenspan’s apologia pro vita sua in the Financial Times of Monday, April 7 2008 fails to convince.

The Greenspan Fed (August 1987 – January 2006) did contribute, through excessively lax monetary policy, to the US housing boom that has now turned to bust.

The Greenspan Fed brought us the Greenspan put (now the Greenspan-Bernanke put). This is the aggressive response of the official monetary policy rate to a sharp decline in asset prices (especially stock prices), even though the asset price declines (a) are unlikely to cause future economic activity to decline by more than was required to meet the Fed’s triple mandate and (b) do not convey new information about future economic activity or inflation that would warrant interest rate cuts of this magnitude.

To me, this indicates that the Fed has been co-opted by Wall Street - the Fed has internalised the objectives, concerns, world view and fears of the financial community to an excessive degree. This socialisation into a partial and often highly distorted perception of reality is unhealthy and dangerous.

The Greenspan Fed failed to appreciate the downside of rapid securitisation during the first half of this decade and acted exclusively as a cheerleader for the undoubted virtues of securitisation.

The Greenspan Fed displayed a naive faith in the self-regulating and self-policing properties of financial markets and private financial institutions.

The Greenspan Fed, by enabling the rescue of Long-term capital management in 1998, acted as a moral hazard incubator. Both before and after LTCM, the Greenspan Fed failed to press for a special insolvency resolution regime with prompt corrective action features for all highly leveraged private financial institutions that were likely to be deemed too big and too systemically important to fail. This demonstrates either bad judgement or regulatory capture. The moral hazard-fraught rescue of Bear Stearns is the lineal descendant of the LTCM bailout.

During his years as Chairman of the Federal Reserve Board, Alan Greenspan’s statements reflected a partial (in every sense of the world) understanding of how free competitive markets based on private ownership work. This partial understanding guided his actions as monetary policy maker and financial regulator.

Mr Greenspan consistently saw but half the picture when it came to what makes competitive market capitalism work. He recognised the central roles of greed, self-interest and competition. He failed to appreciate the complementary roles of non-strategic/opportunistic forms of altruism, honesty, trustworthiness, solidarity and cooperation.

He emphasized self-regulation, spontaneous order and the disciplining effect of reputation. He did not understand the weakness of reputational concerns as a (self-)enforcement mechanism ensuring good behaviour, when credible commitment is, at best, limited in a world with short horizons and easy exits.

He failed to appreciate the essential role external/third-party (i.e. state) enforcement of laws, rules and regulations, and the indispensability of collective action when faced with the threat of the breakdown of trust and confidence.

By overselling, at home and all over the world, the virtues of American-style transactions-based financial capitalism and light-touch regulation, Mr. Greenspan has done more to harm the cause of decentralised, competitive market-based financial systems based on private ownership, than even Charles Ponzi.

Alan Greenspan’s period as Chairman of the Board of Governors of the Federal Reserve System represents to me the nadir of central banking in advanced economic-financial systems during modern times. While monetary policy was only mildly incompetent, the regulatory failures were horrendous. The US and the world economy will pay the price for Mr Greenspan’s misjudgements and errors for years, perhaps decades, to come."

Absolutely amazing video. Plain talk, no spin, no BS, and obviously at odds with the current path of the FED.

This is a MUST watch for any person that cares about our current economic situation.

My take on the whole thing is that he is taking the current treasury and FED to the woodshed for an old fashioned schooling and asskicking.

Really exposes the gutless, nay, criminal thugs in charge of current policy.

SDM

Greenspan is such a slut whoring himself out to a hedge fund that deals with economic distortions and witchcraft. It should be policy to not allow a Fed or member of the government to work in a corporation that can use retired employees like Greenspan. In this era of national security why is he allowed to whore himself out with the inside info he has been exposed to? It's absurd for him to be a slut and dance naked before wall street....pathetic and unethical!

recent quotes from Paul Volker:

“I have problems with fair value accounting…”

“…it is evident it doesn’t solve all problems, in fact, it may create a few…especially among financial engineers.” Specifically, he noted, “There is a real question how to blend insights of mark-to-market accounting where there is no market…. and it may lead to exaggerated movements in the markets.”

“There are beautiful theoretical models in economics which impress accountants, [since the Economists] get Nobel prizes, but applied to the real world that don’t work well, [that] is the real challenge.”

By: Bill Bonner

In the meantime, many people think the feds have done it. By aggressively cutting rates and pushing money out to the banks…and helping to save Bear Stearns…they've turned it around. It is as if they had diverted a giant meteor; the world is saved.

Hallelujah.

But what does it mean, anyway? Let's say they were successful? What would that mean? Have they somehow erased Americans' debts? Are all those upside down homeowners now flipped over so they're sunny side up? And how about all that subprime debt…and all those leveraged loans for mergers, acquisitions and buyouts that didn't quite work…and all those hedge funds who stretched so far to get into the most dangerous investments at the most dangerous time? Have all these mistakes somehow been wiped away?

I feel a religious experience coming on. Somehow, we have all been forgiven our sins…the slate has been washed clean…our errors have been pardoned by an authority more powerful than God himself - the feds.

Could it be?

If it is not…then what does it mean when they say the feds have 'succeeded' in averting a real crisis? What, exactly, have they averted? If they have not erased the mistakes, what have they done with them? If they have not prevented people from getting what they've got coming…who, then, is going to get what those people had coming?

Some people are confused and can't figure out why Paulson and Bernanke would destroy their children's and grandchildren's future. They have made a system in which they make so much money off tax dollars that their great grandchildren's grand children will be handed down immense wealth allowing them to never work a day in their lives. The future is ripe with Paris Hiltons.

Your just not one of them so get back to work.