OMG HOW MUCH FAIL CAN ONE DAY POSSIBLY HAVE

Greenspan today came out and admitted that the free markets’ failure to self-regulate makes him a sad panda, and atop that, there is a “tsunami” upon us (thx to Caroline B and to Amy who both called iterations of this to my attention). Quoting BBCNews:

Former Federal Reserve chairman Alan Greenspan has called the recent turmoil in the global financial markets a “once in a century credit tsunami”. Speaking before Congress, Mr Greenspan, who stood down as Fed chairman in 2006 after 18 years, said he expected the US unemployment rate to jump sharply. He added that recovery in the US housing market was “many months” away.

Returning to the crisis in the banking sector, he said he had been left in “a state of shocked disbelief”.

Not surprisingly, Greenspan was put on the rack for his failure to regulate the subprime morgtage industry and for leaving interest rates low:

One of the main criticisms against Mr Greenspan was that he left interest rates too low for too long, thereby fuelling the housing boom – which later turned out to be unsustainable.

However the former bank boss said he had made a “mistake” in thinking that relying on banks to use their self-interest would be enough to protect shareholders and their equity.

How the words “moral hazard” could not come up in this conversation is beyond me. Why assume any bank would look out for their own rational self-interest when they can cite the RTC and assume that any trouble they get into, there will be a bailout?