Greenspan Condemns Capitalism to Survive Among Washington Elite

RUSH: Well, the bottom is falling out from the oil price. I’m just wondering if the Democrats will put together a bailout plan for the oil companies, ladies and gentlemen. We bailed out AIG. By the way, they’ve gone through 80% of their money, and they may need more or they’re going to have to shut down. I have it in the Stack here. We bailed out the banks. We bailed out everybody. We’re going to bail out people that don’t pay taxes. We bailed out people who got mortgages for homes and couldn’t pay ’em back. I wonder if we will bail out Big Oil, or are the Democrats happy that Big Oil is being killed right now? You remember during the last set of Big Oil-bashing hearings we reminded the country that no one comes to their defense when oil is dirt cheap. Well, that’s where we’re headed again. How about some hearings to find out what we can do to help? Maybe open up ANWR, pass legislation to guarantee offshore drilling indefinitely. There wasn’t any greed here, there wasn’t any price gouging, supply and demand, 8% after-tax profit. The price is still plummeting here and the oil companies are being hurt very, very badly.

I don’t hear anybody talking about bailing them out! The stock market today is down 276, 275 at the moment. It was down much worse than that. It’s rebounding just a little bit. The foreign markets — this was strange, too — the foreign markets usually follow our lead, and we were up yesterday. We finished up 172 on the Dow. But the foreign markets, all of them plunged overnight, and the after-hours trading had to be halted on our stock exchange by rule when it reached minus 6%, down 500 and some odd points. So everyone was expecting a bloodbath today. We haven’t really had a bloodbath, now down 271.60, and I’ve got audio sound bites today. Maria Bartiromo, CNBC yesterday, confirming one of my theories, talking to experts saying, yeah, there is fear over Obama, there’s fear of Obama winning, fear of his tax increases, fear of what he’s going to do to small businesses. It’s real, and it is genuine.

The markets predict the future. The markets correct themselves, and they prepare for what they think is down the road. As you know, ladies and gentlemen, Democrats have been desperately trying to find a Republican to blame all this on. And yesterday Alan Greenspan, the husband of NBC’s Andrea Mitchell, went up there and almost fell on the sword. Now, I don’t know that he’s going to suffice as a Republican here, scapegoat. Here’s a little bit about what Greenspan said. He had a question from Henry ‘Nostrilitis’ Waxman. He said, ‘The question I have for you is, you had an ideology, you had a belief that free competitive — and this is your statement — ‘I do have an ideology, my judgment is that free competitive markets are by far the unrivaled way to organize economies. We’ve tried regulation, none meaningfully worked.’ Do you feel that your ideology pushed you to make decisions that you wish you had not made?’

GREENSPAN: What I’m saying to you is, yes, I found a flaw, I don’t know how significant or permanent it is, but I’ve been very distressed by that fact.

WAXMAN: In other words, you found that your view of the world, your ideology, was not right, it was not working?

GREENSPAN: Precisely. That’s precisely the reason I was shocked because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

RUSH: Now, let me tell you what they’re talking about there, folks. When Henry Waxman questions Greenspan on his ideology, it’s capitalism. Greenspan admitted yesterday that free markets screwed up. That’s how he stays in good graces with the people that run Washington, DC, because the free markets did not screw up, not even the great and courageous Alan Greenspan, apparently, has the guts to tell Henry Waxman that every bit of this mess can be placed right at his feet, along with Chris Dodd’s and Barney Frank’s and Barack Obama’s and ACORN’s and Franklin Raines. Here’s the totality of what Greenspan said. You found your view of the world, your ideology was not right, it was blah, blah, blah, blah. Greenspan said, absolutely, precisely. ‘It’s precisely the reason. I was shocked because I’ve been going for 40 years or more with very considerable evidence that it was working exceptionally well.’ Then he said, and we had the bite, ‘I have found a flaw.’

Pressed by Waxman on what Greenspan saw as his biggest mistake at the helm of the Fed, Greenspan said, ‘I made a mistake in presuming –‘ get this one. This frosts me, folks. Waxman’s question is a total setup. It’s a softball, and Greenspan took it for his own self-interest. He said, ‘I made a mistake in presuming that the self-interests of organizations, specifically banks, were such as that they were best capable of protecting their own shareholders and their equity in the firms. Free markets did break down, and I think that, as I said, that shocked me. I still don’t fully understand how it happened or why it happened. And obviously, to the extent that I figure out where it happened and why, I’ll change my views. If the facts change, I will change.’ The free market did not break down. The free market was not free. There was nothing free about what was going on in the subprime mortgage crisis. There was coercion from government, from Janet Reno, from the Clinton administration. He doesn’t have to look far to find out where it broke down. These were not free markets operating. All of these subprime mortgages were worthless paper from the get-go. The banks — I know, they packaged these and sold them as securities, derivatives, and a bunch of other products, and they got their leverage all out of whack. They were just trying to protect themselves with this by coming up with other sources of revenue that the mortgage repayments were not going to provide.

So now here’s Greenspan, of all people, this is exactly what the Democrats wanted to hear: Free markets do not work, capitalism does not work. That’s why, subtext, we need Obama. Greenspan is not in office. What does he care? It’s just like Colin Powell. Everything, it’s self-interest. You get brought up there and you say whatever you have to say to get outta there with your reputation intact. Now, what does this illustrate? This illustrates precisely, ladies and gentlemen, the political class will protect themselves first, Republicans and Democrats. They will circle the wagons, and they will protect themselves. The political governing class will never take the hit for the things that they do and have caused. It happens in both parties.