Barrel Strength

I was stirring the risotto tonight, telephone on the shoulder, crowing about what a great week it was for conservatives. Oban was my interlocutor at the other end of the call. The hack of the Climate Reseach Unit at East Anglia University continues to be the gift that keeps on giving. Global warming exposed as fraud! Berlin Wall falls! Communism over! Hurrah!

Yes, I have been exultant. I have probably made myself more than usually obnoxious to wets, bedwetters, warmists, leftists: the vast throng of the wrong.

Oban pointed out, in his usual mild but incisive way, that the other crew of ideologues who had been proven decisively wrong, and who had cost the world economy a few trillion, not by treaty but by unintelligible debt instruments, were the pure marketeers, the libertarians, the ones who thought that the market would always assess risk correctly, and that therefore no financial crash was possible in an environment of pure information. Yes, Alan Greenspan, Chairman of the US Federal Reserve Bank, chief architect of the laisser-faire in markets for the last 15 years. The one who constantly preached to the US Senate that there was no need for the US Commodities Trading Organization to regulate debt instruments which were at the base of the current financial crisis.

All true. But you know the difference? Alan Greenspan came to the US Senate and admitted he was wrong. He said he was completely wrong about the capacity of markets to assess risk. In short, his postulate, the equivalent of e=mc², was wrong.

“”I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms,” said Greenspan.”

In the New York Times coverage of that story, he said:

But Mr. Greenspan, who was first appointed by President Ronald Reagan, placed far more blame on the Wall Street companies that bundled subprime mortgages into pools and sold them as mortgage-backed securities. Global demand for the securities was so high, he said, that Wall Street companies pressured lenders to lower their standards and produce more “paper.”

“The evidence strongly suggests that without the excess demand from securitizers, subprime mortgage originations (undeniably the original source of the crisis) would have been far smaller and defaults accordingly far lower,” he said.

Despite his chagrin over the mortgage mess, the former Fed chairman proposed only one specific regulation: that companies selling mortgage-backed securities be required to hold a significant number themselves.

I am waiting, but not holding my breath, for Phil Jones, Keith Briffa, Kevin Trenberth, Michael Mann et alia, to admit to their errors, let alone crimes.