Can We Take Away Alan Greenspan's Pension? by Dean Baker

He discusses Joe Nocera's column on the F.C.I.C.'s report.

Financial Crisis Inquiry Commission releases report:

Behind closed doors, Ben S. Bernanke, the Federal Reserve chairman, called it "the worst financial crisis in global history, including the Great Depression." 

He said that 12 of the country’s 13 most important financial institutions, including Goldman Sachs, had been on the verge of collapse "within a week or two." (The apparent exception: JPMorgan Chase.)

Explaining the Crisis with Dogma by Joe Nocera

I hope this is an eye opener for young people with functioning brain cells who are trying to figure out what's going on instead of just focusing on getting by.

I like Nocera and agree with his openly stated views but it wasn't very smart of him to bash Hewlett Packard's board in his column while his wife was working as a lawyer against those same people.

And yet he was very smart to team up with Bethany McLean and I am looking forward to reading their book.

I always cut people who I admire a lot of slack. (Although I never cut Clinton much slack, I do cut Obama some). They're human.

Krugman once consulted for Enron, but he learned from his mistake - although I'm not clear on the details - and will write: 

Or consider the California electricity crisis of 2001-2002. Years after we actually had tapes in which Enron traders could be heard telling power plants to shut down, news reports continued to repeat the conservative line that it was all about excessive regulation that wouldn’t let the power companies build capacity -- with no mention at all of the market manipulation.

In the same blog post, a good reference:

Put it this way: I’ve been rereading George Orwell’s Looking Back at the Spanish War, and it feels familiar.

Wall Street Whitewash by Krugman

Take a Load Off Fannie: Why won't the GOP's financial-crisis report follow the money? by Bethany McLean

Financial Crisis Inquiry Panel to delay report until the end of January.

The Beatings Will Continue Until Morale Improves

Irish Officials Acknowledge Need for Aid in Debt Crisis.

Ireland: a Textbook Example of the Dangers of Balanced Budgets and Fiscal Responsibility by Dean Baker

OECD sees global recovery slowing

Mea Culpa

Bernanke appeared before the Financial Crisis Inquiry Commission and admitted
he had been wrong.

Mr. Bernanke said that when he made his remarks in 2007 he thought the subprime problems were "manageable."

"What I did not recognize was the extent to which the system had flaws and weaknesses in it that were going to amplify the initial shock from subprime and make it into a much bigger crisis," he said.

He basically agrees with Yale professor Gary Gorton, who I blogged about here.

Professor Gorton has compared the crisis to a classic bank run, but with the "banks" in this case being short-term wholesale financing markets -- a loosely regulated, uninsured system known as shadow banking.

About the housing bubble, Sewell Chan - author of the linked NYTimes piece - writes,

In a 2002 speech when he was a Fed governor, Mr. Bernanke argued that central banks should not try to use monetary policy to pop asset bubbles. As part of his nearly three hours of testimony on Thursday, Mr. Bernanke held to that view, but said that at the time he had called for careful supervision and regulation to maintain financial stability.

"We didn’t do that," conceded Mr. Bernanke, who became Fed chairman in 2006. "Going forward, we need to be able to do that."

and

While Mr. Bernanke stuck with his long-held stance that the Fed had not aided the housing bubble by keeping interest rates too low for too long in 2002-4, he embraced the view of Gary B. Gorton, an influential Yale finance professor.

Dean Baker writes:

Any serious weighing of the benefits and risks of bursting the bubble in 2003-2004 would have surely come down in favor of bursting the bubble. The Fed's decision not to burst the bubble was one of the most disastrous failures of monetary policy in history.

Will the Financial Crisis Inquiry Commission's report reflect that?