It was a four hour testimony, so I only have some snippets from WSJ. Here are the best ones:
a) Mr. Greenspan was asked when he knew there was a housing bubble and when he told the public about it. He answered that he never anticipated home prices could fall so much. "I did not forecast a significant decline because we had never had a significant decline in prices," he said. -
Now we are talking!! A bet on ever increasing prices - also called gambling in Vegas. There have probably been more real estate bubbles than commodity price bubbles in this world.
b) If the best experts were not able to foresee the development, "I think we have to ask ourselves, 'Why is that?'" Mr. Greenspan said. "And the answer is that we're not smart enough as people. We just cannot see events that far in advance."
Thats not true. There were a lot of people who saw what was happening, and have made billions shorting the real estate market in US. I got the feeling after reading Greenspan's book that he started thinking of himself as God. So probably he closed his mind to positions and beliefs that conflicted with his belief and ideology.
People in democracies keep criticizing their politicians saying that they are all corrupt etc. Why are technocrats better? Probably the biggest problem is not Greenspan's philosophy, but that he was Fed Chairman for 17 years - thats a very long duration in a position of enormous power, and would make any human being think that he/she is a God. It was Bill Clinton's mistake.
There is one thing in all this that makes me respect the US - people are after the right person (Greenspan), even though he left 2-1/2 years ago. If it had happened in India, they would be after the current incumbent. Congress will blame the next govt for the mess that is going to happen in 2010, even though the seeds have been sown under their watch.