Alan Greenspan, the former head of the Federal Bank and the Federal Reserve Chairman, which is the position currently held by his successor, Ben Bernanke, has sat down in front of a congressional committee designed to question those that were in power when the crisis supposedly took root and find out what the answers are to why it started and basically to make these guys sweat.
However, it is my opinion that it was not one person responsible, but a whole bunch of people, from the businesses and banks that bundled these high risk home loans as investments, to the investors who took them up on it, not taking into account that if the housing market crashed down, so would their investment. They did not take into account that the housing market is cyclical, and so is their investment, so many people’s savings and retirement funds were wiped out once the housing market hit the fan, so to speak.
Greenspan did not specifically address the criticism he has received as being a major contributor to the current crisis, but instead seemd to squarely place the blame on the investors and the banks who gave loans indiscriminantly and also bought these securities not thinking about the future of them. He is partly right, but he is also partly to blame along with any other advisors who made the decisions to lessen government regulation of the banks and securities organizations that created this mess in the first place.
Greenspan, still a trusted figure when it comes to economics, said he believes that this crisis will result in a severe downturn and will also unfortunately result in many Americans losing their jobs since consumerism will not be at it’s traditional peak as it usually is, and businesses will suffer and pass that suffering on to their employees by way of layoffs as well as cutting overtime and raises. In short, we have ourselves in a big nasty bind and it will take a long time to pull out of it, but we will. The US economy always pulls out, it’s just a matter of time.