One of the architect's of the financial crisis issued a warning that banks still have unfunded liabilities that were not properly accounted for by the Treasury Department's “stress tests.”
Yesterday evening, Alan Greenspan also said that “…until the price of homes flattens out we still have a very serious potential mortgage crisis.”
Lest we forget, it was the maestro's absurd interest rate policy earlier this decade that helped fuel the housing market bubble in the first place. And his comment that systemic risk was balanced across the globe through the use of derivatives (like credit default swaps) gave tacit approval to practices that have proved to be absolutely disastrous.
Personally, if I were Greenspan, I'd keep my mouth shut and ride off into the sunset. I wouldn't want to call attention to just how badly I misjudged the economy at the end of my term. But maybe that's just me…
