Did you catch Alan Greenspan, the former immortal of the financial world, before that congressional committee last Thursday? Not just the market but the reputation of its idol has slumped since his heyday, when crowds flocked to get autographed copies of his book. Could this be the same man? Greenspan the Great had become just another old man, a coat upon a stick, lost in a world he had indeed made. That was the hell of it.
Where had the old, all-knowing master of the economic universe gone? Where was the gnostic terminology, the mystic indecipherability, the godlike above-it-all-ness? Someone had replaced him with a cheap knock-off.
Chairmen of the Fed just ain't what they used to be. A phrase in the small print of fancy financial brochures comes to mind: Past performance does not guarantee future results. Alan Greenspan's much-celebrated past has set him up as the whipping boy for the troubled present.
Mr. Greenspan could only say he hadn't foreseen the dramatic fall in housing prices because it hadn't happened before, as if the essential lesson of the past expect the unexpected had escaped him. No wonder prudence is the first of the cardinal virtues, but who studies the church fathers any more? (In some ways, returning to the medieval would be an advance.)
The need for something as old-fashioned as caution, the instinctual wariness of brave new experiments like those tricky derivatives, seems to have come to Mr. Greenspan as some kind of revelation. Alan Greenspan's guru costume, it turns out, had only been rented and had to be returned. John Galt had been replaced by Mr. Milquetoast.
The curtain had parted, and the Wizard of Oz was revealed as just another kibitzer. The erstwhile Genius of the Markets was being called on the carpet, like some racetrack tout who'd called the seventh at Hialeah wrong. It was hard to believe that the poor schlemiel before the cameras had once been Alan Greenspan. This must be a ringer. He was no longer speaking in riddles, but in plain English. He was even confessing error, or at least that he was human.
Quite a comedown in his case. Worst of all, his dethronement wasn't even mysterious, dramatic, or shocking. It was just ... boring.
It was just that everything had gone wrong all at once, you see. It was like one of those hundred-year floods that occurs every few years. A fluke. If only the bankers, or the investors, or the forces of Nature had acted as they were supposed to with due regard for past performance and the statistical precedents. ... Mark Twain once referred to the three kinds of lies as "lies, damned lies, and statistics." And he hadn't even seen any computer models.
It was as if the Oracle of Delphi had come down to face the mob in the agora. Well, that's not quite fair to mobs. The inquisitors on this committee would have made your everyday mob look civil. They've been out shopping for scapegoats for some time, and today was Alan Greenspan's turn to try on the sackcloth and ashes. If he had forgotten prudence, the more vengeful members of the committee had forgotten the other three cardinal virtues justice, fortitude and temperance. Not to mention faith, hope and, especially when they were taunting the witness, charity.
There's something about a congressional committee out for blood, or at least contrition, that makes some of us uneasy the way a perp walk always leaves us sympathizing with the perp.
These heckle-the-formerly-great sessions may be great fun for the congressmen conducting them, but they'll never be entirely satisfying until the witness list includes recipients of Fannie's and Freddie's favors, such as Barney Frank, chairman of the House Financial Services Committee, that sleepiest of watchdogs, and Chris Dodd, the senator from Countrywide. But now all these honorables who were on the receiving end of all that baksheesh, including Senator and current messiah Barack Obama, cry as one for ... Reform!
It's quite a show, but the country has seen this number before: the Nye Committee in the '30s, the McCarthy Committee in the '50s, and now the current production of Someone Must Pay For This! The script is entirely too familiar.