This New York Times piece will likely serve as a nice source for future historians looking to construct an intellectual history of the Federal Reserve chair’s office. The author, Peter S. Goodman, links Alan Greenspan’s libertarian, free-market philosophy to both Ayn Rand and a somewhat simplistic faith in investors to be cautious. The article makes a strong attempt to chronologically follow the signs that an under-regulated derivatives market might turn out for the worse. Many legislators and contemporaries are quoted. It is clear that many intelligent people didn’t understand how derivatives work.
During a crisis it’s easy, of course, for colleagues and former regulators (both Democratic and Republican) to come out of the woodwork with 20/20 hindsight. Others act like they were fooled by Greenspan’s expertise and confidence. Warren Buffet comes out smelling like a rose. Still, no one wants to be wrong.
The article is compelling. Check it out. – TL