Alan Greenspan’s audacity

Saturday, 27th September 2008.

Lawmakers in the US struggle to come to terms with the scale of the financial crisis, the Paulson solution, and the role of government in resolving this crisis.  Republicans, particularly conflicted, sabotaged the $700 billion bail-out last Thursday.  At this moment Alan Greenspan proferrs advice from the lofty heights of the pedestal he still, astonishingly, stands on.  “As a practical matter” he and others write in the Wall St. Journal (26.09.08) and “at the current stage of the crisis, the only way that financial institutions can continue to function is for the government to provide financial support.”

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How orthodox economists bluster and fluster…..

15th September, 2008.

To address this very grave global financial crisis effectively, one needs to analyse it correctly. A wrong analysis results in wrong conclusions and solutions, just as a wrong medical diagnosis can lead to wrong, often life-threatening treatment.  Orthodox economists, who have for so long turned a blind eye to the finance sector, to privatised credit creation and its role in fuelling asset bubbles, do not understand this crisis. They did not predict this crisis. And their  deeply flawed economics mean they cannot therefore resolve this crisis. Indeed they are supremely irrelevant to this crisis.

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Missing: confidence, and ehem… $400 billion

We trust Central Bank governors. They are after all, civil servants – not masters of the universe – there to serve the citizenry, not just the finance sector. And they are charged to act as ‘guardians of the nation’s finances’.

So when the deputy governor of the Bank of England says in a report

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