Alan Greenspan: Craaaazy Economy, No?

This weekend, as our frozen credit markets and subprime space aliens took investment bank Bear Stearns -- the fifth largest in the country -- down, down, down into the ground, former Federal Reserve chairman Alan Greenspan wrote an article that saved the American economy. Hurrah! Regarding the moral hazard of huge companies taking inappropriate risks because the Fed will rescue their broke asses when it hits the fan ("they're too big to fall!"), kindly old hobbit-sage Alan Greenspan offers these soothing words: who knew!?

This is a particularly Frothy statement from Andrea Mitchell's husband:

The crisis will leave many casualties. Particularly hard hit will be much of today's financial risk-valuation system, significant parts of which failed under stress.Those of us who look to the self-interest of lending institutions to protect shareholder equity have to be in a state of shocked disbelief.But I hope that one of the casualties will not be reliance on counterparty surveillance, and more generally financial self-regulation, as the fundamental balance mechanism for global finance.

Well thank you for that ALAN, for suddenly realizing that you are not Too Big To Fall.

 We will never have a perfect model of risk [Financial Times]