Alan Greenspan has made one last appearance at the Senate to explain his perspective on the recent financial market turmoil. In the process, he got a right grilling, and had to admit that maybe he had it wrong.But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending.I wish I could be wrong the way Greenspan was wrong. 18 years in the top job and having steered the American economy into a succession of bubbles-and-bust scenarios, he's still sitting on a mighty reputation as one of the more successful men on the planet. Not to put too fine a point on it, the man has metaphorically trashed daddy's car three or four times but has never been asked to pay up. Perhaps that is the limitation of metaphors.
“Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform.
Now 82, Mr. Greenspan came in for one of the harshest grillings of his life, as Democratic lawmakers asked him time and again whether he had been wrong, why he had been wrong and whether he was sorry.
Critics, including many economists, now blame the former Fed chairman for the financial crisis that is tipping the economy into a potentially deep recession. Mr. Greenspan’s critics say that he encouraged the bubble in housing prices by keeping interest rates too low for too long and that he failed to rein in the explosive growth of risky and often fraudulent mortgage lending.
“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”
Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”
On a day that brought more bad news about rising home foreclosures and slumping employment, Mr. Greenspan refused to accept blame for the crisis but acknowledged that his belief in deregulation had been shaken.
He noted that the immense and largely unregulated business of spreading financial risk widely, through the use of exotic financial instruments called derivatives, had gotten out of control and had added to the havoc of today’s crisis. As far back as 1994, Mr. Greenspan staunchly and successfully opposed tougher regulation on derivatives.
But on Thursday, he agreed that the multitrillion-dollar market for credit default swaps, instruments originally created to insure bond investors against the risk of default, needed to be restrained.
It's not all his fault per se, but it is true that a lot of the contributing factors were given the green-light by Mr. Greenspan.
CBD Metro to Rozelle?
Current NSW Premier Nathan Rees announced that he is asking the Federal Government to back a Metro that goes from Town Hall, Martin Place, Barangaroo, Pyrmont and Rozelle.
Plans would then emerge as to an "extension to Macquarie Park and Epping as a second phase" or a "future West Metro as an Alternate second phase".Umm, yeah Mr. Rees. If the plan is to turn Barangaroo into a kind of Wall Street of Australia, then it's definitely going to need its own station. It's a little disappointing the sucker stops at Rozelle. Would be better to at least get up to Drummoyne, which would cut some buses down Victoria Road.
More detail on the "sequencing" of those lines would be made available in the November mini-budget, Mr Rees
But neither Mr Rees nor the co-ordinator-general in the Premier's Department, David Richmond, could put a costing on the CBD project, despite the fact they had just briefed Infrastructure Australia bureaucrats on it.
Later, the Premier's office advised the CBD metro project would cost $4 billion, one third of the cost of the North-West metro that the former Premier Morris Iemma announced in March.
The NSW Opposition Leader, Barry O'Farrell, said Mr Iemma may have been the "ditherer'' but Mr Rees was the "gibberer'' who had devised the plan "on the back of a lemon squash coaster''.
"I'm wondering if my kids will see this North-West metro ever built,'' he said.
"If it wasn't so serious it would be a joke ... He makes it up as he goes along.''
The metro line would also service the Education Minister Verity Firth's marginal seat of Balmain, a further win for Ms Firth after she won a decision on Callan Park earlier in the week, with Mr Rees announcing it would be kept in public ownership.
Mr Rees said the project was about setting in stone that Sydney would have a metro system.
"By getting appropriate public transport into the Barangaroo development, which everyone recognises will be the heart of the financial district, means that over time we demonstrating to the region and the world that Sydney is not about pulling things out of the ground and mining, it is about financial services and related services and the export of our expertise."
It seems woefully inadequate for a start, but it's a start all the same. The opposition is proably going to inherit this project and stretch it out to the North West any way.
A Thought About Sydney's Public Transport System
I've been taking the Sydney PT for the last 3 weeks since my accident and I'm getting a first-hand look at just what the problem is when it comes to urban transit. Here's my daily trip to work:
- I take a 7min walk to the station, and wait for the bus on average 7-10 minutes.
- Then I ride the bus down Victoria Road over the Anzac Bridge into Town Hall, which takes about 40minutes.
- There, I walk for 5 minutes which includes the ticket buying exercise and going down to the platform.
- The train inevitably arrives within 5 minutes, and takes about 10 to get to Sydenham.
- From there I walk to the office - a 5 minute walk.
All in all, it takes 75minutes to get to work, but none of the steps in of themselves are really that dreadful. It's not even that tiring if I can get a seat on the bus. I inevitably do on the train. The thing is, I'm always aware that the trip to work by car is 25minutes through traffic on City-West Link and Norton Street.
The least reliable aspect of this trip are the buses, and even then, they're not as bad as the press is braying about it. What's really bad is that on a rainy day, Victoria Road clogs up with traffic. It's as if Sydney's commuters are the Wicked Witch of the West and deice that they're going to melt if they don't drive their cars to work. You can easily sit for an hour on a bus on a rainy day - and that's not the bus' fault.
I've been told it's been worse since the Lane Cove tunnel opened. I can well imagine that people commuting in from the North West might opt for going down Victoria Road rather than pay the toll, and who would blame them? If you include the Harbour Bridge toll, you would be paying 5 tolls a day, just to commute.
In fact one of the things the NSW government really should do to ameliorate the traffic situation is to dismantle tolls. That way, people will opt for the shortest distance to work rather than try to rat-maze their way around the tolls and congesting suburban roads. Right now, there's so little rationality in the way the whole thing is set up. People are rewarded for avoiding toll roads; people feel the tolls are a punishment. It's clear the Macquarie Infrastructure model is a crock of shit that has turned Sydney into an urban dung-heap in a matter of 15 years.
The other thing that struck me about Sydney traffic is the fact that Sydney is a lot more diffuse than we think. The urban density of Sydney is actually quite low in parts. Thus, we spend a heck of a lot of our time getting to places driving past interminable rows of 1/4 acre block houses. It's clear that the absence of planning for Sydney - a condition which lasted decades - has come back to bite us. The metro project is only going to begin to address these problems and we may not see the results of it for a long time.
No comments:
Post a Comment