Two weeks ago, Nell Minow of the Corporate Library proposed the Paul Volcker
rule (named after the former Federal Reserve chairman) in an appearance before
the same House committee: "If Paul Volcker can't understand it, it shouldn't be
on the market."
From here. The op-ed piece is basically arguing that Greenspan's admission of error and lack of understanding marks the end of an economic paradigm. Mebbe. I suspect that it will be a cyclical process- we will over-regulate for the time being. In 20 years or so, there will be another Greenspan, and we will return to "irrational exuberance," and simple faith that looking out for their own best interests will always lead companies to make wise decisions. Faith that long-term viability will trump short-term profits. I happen to not buy that idea.
On the other hand, and for the record, I do think that scapegoating Greenspan is overly simplistic and unfair. I think there is much to admire and respect in the guy- I disagree with him pretty fundamentally on many issues, but I respect his point of view. I have learned a lot from him, and that's high praise. (I've learned more from Krugman, but another time, another time...)
The concluding line (from the same article):
One doesn't need a Nobel prize to know what brought about the collapse of this
intellectual edifice. Humorist Roy Blount summed it up in a talk before an
audience in Philadelphia earlier this week: "Money got too abstract, and that's
why it went away".