Blame?

We ain't got no Blame. We don't need no Blame! I don't have to show you any stinkin' blame!

There's a lot of banditos out there, taking no blame for all the Fred C. Dobbs they suckered, and one of the biggest, today, takes to the pages of the Murdoch Street Journal for his turn at turning his back on the economic meltdown, saying "Don't Blame Me!"



Mr. Andrea Mitchell, aka Alan Greenspan, the former Fed Chief, pleads "The Fed Didn't Cause the Housing Bubble" and, of course, toes the party line of warning againts too much regulation.

If it is monetary policy that is at fault, then that can be corrected in the future, at least in principle. If, however, we are dealing with global forces beyond the control of domestic monetary policy makers, as I strongly suspect is the case, then we are facing a broader issue.

Global market competition and integration in goods, services and finance have brought unprecedented gains in material well being. But the growth path of highly competitive markets is cyclical. And on rare occasions it can break down, with consequences such as those we are currently experiencing. It is now very clear that the levels of complexity to which market practitioners at the height of their euphoria tried to push risk-management techniques and products were too much for even the most sophisticated market players to handle properly and prudently.

However, the appropriate policy response is not to bridle financial intermediation with heavy regulation. That would stifle important advances in finance that enhance standards of living. Remember, prior to the crisis, the U.S. economy exhibited an impressive degree of productivity advance. To achieve that with a modest level of combined domestic and borrowed foreign savings (our current account deficit) was a measure of our financial system's precrisis success. The solutions for the financial-market failures revealed by the crisis are higher capital requirements and a wider prosecution of fraud -- not increased micromanagement by government entities.

Sorry, there, Mr. Mitchell ... Thank you for playing our game, and there is some lovely parting gifts for you.

Frank James, on The Swamp;

Greenspan may be right that the bubble had less to do with the fed-funds rate than the massive mountain of cash from Asia Americans were able to borrow. 

But history will probably judge him more harshly than he appears willing to judge himself. A famous line holds that Federal Reserve chairs are supposed to take the punch bowl away to keep the financial party from getting too irrationally exuberant.

Greenspan, however, appeared to be in a festive mood too. In 2004, he sang the praises of adjustable rate mortgages, many of which have contributed to the financial and economic woes currently roiling the nation.

James also quotes a 2004 USA Today article, with Mr. Andrea Mitchel saying "Overall, the household sector seems to be in good shape ..." And ""American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage ..."

That, being the Adjustable Rate Mortgage that Wall Street was ladling out like happy soup.

And the big Ownership Society your boss, The Commander Guy, was spinning.

I'm with John Cole, over on Balloon Juice;

And for the record- I want so much regulation of the financial sector that if someone at Goldman Sachs wants to take a piss, he has to get a hall pass from Dennis Kucinich. They don’t like it, they can move to Iceland and see how they feel about bankers.