The Modern Lemming

As many of you who have been following this blog may be aware I am not the greatest fan of Mr. Greenspan. In fact, he was the one person who could have turned this whole affair into a recession, which we would have pretty much recovered from by now. Instead, by flooring the monetary pedal in the US with 1% interest rates he turned what could have been a post-dotcom recession into a multi-generational depression. Apparently overnight the maestro has testified before a US Senate committee (check the link above from The Australian). It now transpires that big Al believes he made a mistake. This is the quote I like the most from the article:

"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity (myself especially) are in a state of shocked disbelief,"

So let me get this right. You employ a bunch of baby-souled investment bankers who are remunerated on transaction volumes and size. You incentivise these people on the basis of annual bonuses and not long term value creation. You institutionalise structures through securitisation and derivative products to obfuscate risk at every opportunity………….and you trust banks will survive because notionally they have a sense of self-preservation?

Let me introduce you to a species you may need to familiarise yourself with Al…….Lemmus Lemmus.