Anorak News | It’s Those Damn Atheists Again

It’s Those Damn Atheists Again

by | 12th, October 2008

JEFFREY Frankel announced a few months back:

“They say there are no atheists in foxholes. Then there are also no libertarians in financial crises.”

Much as it pains me to have to agree with an economist, he does seem to have got that bit right.

Although there is a notable exception to the Frankel’s Rule.

Whilst the vast majority of people who claimed to be libertarians, particularly in the US, didn’t even blink at Hank ‘Call Me Uncle Joe’ Paulson’s original proposals – preferring to save their fire for those evil shorting bans until they could work out how much money they could remove from the poor bloody infantry, otherwise known as the taxpayers – I know of at least one libertarian who has remained true to his principles.

So, an apology to Ken McLeod.

Here’s Peter S. Goodman in the NY Times, writing on Alan Greenspan, via:

And I can get back to wondering just why the joint CEO of Goldman Sachs needs $55 million so badly that he is selling property in a crashing market…

Economists from across the ideological spectrum have criticized his decision to let the nation’s real estate market continue to boom with cheap credit, courtesy of low interest rates, rather than snuffing out price increases with higher rates. Others have criticized Mr. Greenspan for not disciplining institutions that lent indiscriminately.

But whatever history ends up saying about those decisions, Mr. Greenspan’s legacy may ultimately rest on a more deeply embedded and much less scrutinized phenomenon: the spectacular boom and calamitous bust in derivatives trading….

“It seems superfluous to constrain trading in some of the newer derivatives and other innovative financial contracts of the past decade,” Mr. Greenspan [wrote in his memoir “The Age of Turbulence”]. “The worst have failed; investors no longer fund them and are not likely to in the future.”…

“In a market system based on trust, reputation has a significant economic value,” Mr. Greenspan [said in a speech]. “I am therefore distressed at how far we have let concerns for reputation slip in recent years.”

As the long-serving chairman of the Fed, the nation’s most powerful economic policy maker, Mr. Greenspan preached the transcendent, wealth-creating powers of the market.

A professed libertarian, he counted among his formative influences the novelist Ayn Rand, who portrayed collective power as an evil force set against the enlightened self-interest of individuals. In turn, he showed a resolute faith that those participating in financial markets would act responsibly.

Libertarians, to a banker…

– Chenier, Anorak

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Posted: 12th, October 2008 | In: Money Comment | TrackBack | Permalink