SHOCK AND AWE
It's said that if one lives long enough, one will pretty much end up seeing everything. Long-time market-watchers will likely have that reaction watching former Fed chairman Alan's Greenspan's comments today on Capitol Hill, as this Wall Street Journal piece reports:
"Former Federal Reserve Chairman Alan Greenspan said he “made a mistake” in believing banks and others would protect their shareholders and own firms’ equity. He was “shocked” to learn of the breakdown in lending standards and risk management at the firms that lead to the current credit crunch.
“I still do not fully understand why it happened and obviously to the extent that I figure where it happened and why I will change my views. If the facts change I will change,” he told the House Oversight Committee.
Rep. Henry Waxman, chairman of the committee, challenged Mr. Greenspan and asked “You found your view of the world…was not right?”
Mr. Greenspan admitted that he “found a flaw” in his ideology and “that’s precisely the reason I was shocked.”
Professionals in the financial markets always look for signs of capitulation in bear markets. Greenspan capitulating as it were on his world view of deregulated (and presumably self-regulating) markets, is one whopper of a capitulation. A landmark event of some note indeed.