A couple of years back, a Reggae-influenced hip hop artist named Shaggy had a hit with a song called It Wasn't Me. The thrust of the song (pun sort of intended) was that Shaggy had gotten caught in the act with the girl next door by his girlfriend. Regardless of the fact that his girlfriend was watching him with this other woman, his approach was to simply deny everything:
She saw the marks on my shoulder (It wasn't me)
Heard the words that I told her (It wasn't me)
Heard the scream get louder (It wasn't me)
I hadn't thought of that song in quite a while, but it popped into my head this morning while reading Alan Greenspan's commentary, The Roots of the Mortgage Crisis, in this morning's Wall Street Journal. Following Greenspan's recent book, The Age of Turbulence, Greenspan has now turned to the Journal's editorial page where he lays the blame for the current mortgage crisis on... the collapse of Communism??? To quote Greenspan:
The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when the economic ruin of the Soviet Bloc was exposed with the fall of the Berlin Wall. Following these world-shaking events, market capitalism quietly, but rapidly, displaced much of the discredited central planning that was so prevalent in the Third World.
Yes, from a timing perspective, I guess the troubles did begin in the late 80's. As Herb Greenberg points out, that's also about the same time as he began his term as Chairman of the Fed.
That's not to say that Greenspan is the primary target for our subprime woes. However, he certainly has culpability, which you'd never sense from reading his memoir or today's editorial. The Fed is supposed to anticipate how the market may react to interest rate changes. While there are other agencies with primary responsibility for monitoring the banking industry, few had the ear of the public and the markets that Greenspan had. There were many warning signs, particularly as lenders began to steer borrowers into esoteric offerings like negative equity loans.
Of course, Greenspan isn't the only person whose words left me wondering this week. Newspaper magnate and soon to be convict Conrad Black caught the attention of many with his pre-sentencing courtroom statement earlier this week:
The other thing I'd like to say is I do wish to express very profound regret and sadness at the severe hardship inflicted upon all of the shareholders, including a great many employees, by the evaporation of $1.85 billion of shareholder value under my successors.
Yes, facing years of jail time, Black showed no remorse for his crimes, but simply disdain for the people who tried to clean up the mess he left behind at Hollinger.
To quote another Alan (Dershowitz), it takes chutzpah.
