Posted by Matthew Rothschild on October 24, 2008

There was something almost criminally pathetic about Alan Greenspan’s confession that he had “made a mistake” in believing that banks could adequately police themselves.

Duh, deregulation doesn’t work. Even Greenspan, the apostle of Ayn Rand, admits that now, too late.

Like some bumbling professor, he said he was “in a state of shocked disbelief” that his treasured free market theory was faulty, even though economists from Marx to Keynes to Galbraith had noted it, and Bernie Sanders, Dennis Kucinich, and Ralph Nader, among many others, had been pointing it out for years.

“I have found a flaw,” Greenspan testified.

That’s kind of like the astronomer Ptolemy saying, “Something’s wrong here, maybe the sun doesn’t revolve around the Earth.”

Or like the biologist Lamarck saying, “Maybe the giraffe doesn’t get a longer neck by stretching for high leaves.”

Or like the Pope saying, “Maybe the earth wasn’t created in seven days.”

Except that the consequences of Greenspan’s blunder are much more severe than the fallacies of the past.

He and his faulty free market philosophy have precipitated a global recession.

Millions are losing their homes. Millions more will lose their jobs. And tens of millions have already lost their retirement funds.

All casualties of Greenspan’s belief in a fable.