Alan Greenspan and Paul Ryan: Prelude to collapse

Alan Greenspan and Paul Ryan: Prelude to collapse

Atlanta : GA : USA | Aug 24, 2012 at 1:07 PM PDT
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ATLANTA - Rep. Paul Ryan has been all over the news lately, and with good reason.

The young politician is seen by many as a polarizing figure in the world of American politics. Villified by the left, Ryan is touted as a "conservative's conservative" by many on the right.

Ryan credits Ayn Rand with getting him interested in politics, saying in an article by journalist Jane Mayer that "(T)he reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand. And the fight we are in here, make no mistake about it, is a fight of individualism versus collectivism.”

He expounds a little on that thought in a Poltico piece saying, "I think Ayn Rand did the best job of anybody to build a moral case of capitalism, and that morality of capitalism is under assault.”

It's been reported that Ryan, despite recent attempts to distance himself from the philosophical champion of atheism and pure self-interest, gave his office staff copies of "Atlas Shrugged" as a Christmas gift.

Perhaps it was an attempt at ironic humor.

Seen against the backdrop of these views, it comes as no surprise then that Ryan voted in favor of the Financial Services Modernization Act of 1999, a bill that largely deregulated financial markets and aided in the (further) oligarchization of the banking industry.

Alan Greenspan, former Federal Reserve Chairman (and contemporary of Milton Friedman) in a speech to the Federal Reserve board on November 15, 1999, had this to say about the bill: "It is clear that the consumer will benefit from the wider permissible scope of activities by, and the more equal competition among, financial entities. That is why the Federal Reserve actively supported this legislation for so long. Management now will be given greatly enhanced flexibility to determine the best way to deliver its services to the market place, and the market will judge the correctness of that choice. "

The bill, signed into law by then-President Bill Clinton three days prior to Greenspan's statement, would prove to be a major contributing factor in the collapse of U.S. financial markets.

The passage of the bill allowed commercial banking institutions to develop a host of exotic financial products, none more exotic than the CDO or collateralized debt obligation.

In essence, the CDO allowed investment banks to gamble with investor money on less than desirable debt packages, that were sold at a reduced rate due to the false ratings handed out by credit rating agencies.

Realizing his misstep, Ryan quickly voted in favor of the Bush Administration's TARP program, the initial $787 billion of American taxpayer money that bailed out financial giants AIG, Goldman-Sachs and Citigroup.

Likewise, Greenspan, in what many considered a stunning admission of error, began to ruminate on the most drastic form of regulation possible. ”It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do."

Greenspan, perhaps sensing the coming financial storm, stepped down as Federal Reserve Chairman in 2006.

It seems that Ryan, like Greenspan, believes in individualism and laissez-faire economics, so long as they can each decide what those terms mean and then change their minds when convenient.

By Benjamin Burton Jr.

If you like to write about U.S. politics and Campaign 2012, enter "The American Pundit" competition. Allvoices is awarding four $250 prizes each month between now and November. These monthly winners earn eligibility for the $5,000 grand prize, to be awarded after the November election.

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Benjamin Burton Jr. is based in Atlanta, Georgia, United States of America, and is an Anchor on Allvoices.
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