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Angelo Matera | 10.09.08


Alan Greenspan, Ayn Rand and the Libertarian God that Failed

In today’s NY Times, Peter Goodman’s excellent profile of former Federal Reserve Chairman Alan Greenspan confirms what I’ve been writing, that it was a specific “structure of sin”—financial speculation—rather than mere human greed (or bad home loans) that created the credit crisis. I’d always wondered how a rigid anti-government libertarian ideologue like Greenspan—an Ayn Rand disciple, no less—managed to get appointed to the most powerful economic post in the world. If he had been running the Food and Drug Administration, he would have been exposed within a few months, as soon as the first deaths caused by lax food inspection started happening. But the byzantine complexities of global finance, and the fact that Ponzi Schemes can run for a long time before collapsing, meant Greenspan could reign for twenty years before the effects of his blindness would be seen in today’s financial meltdown. Despite warnings from experts, Greenspan did nothing to regulate the market for financial contracts known as derivatives as it grew from “a relative pittance just two decades ago” to $106 trillion in 2002 to $531 trillion today. Along the way he had accomplices from across the political spectrum, from current McCain advisor Phil Gramm, to Clinton Treasury Secretaries Robert E. Rubin and Lawrence Summers. (If anything, this financial crisis should convince doubters that we’re living under one party rule.)

I’ve cited the esteemed management guru Peter Drucker’s remarks about Wall Street’s reckless fascination with derivatives before; in that same vein, this article cites some of the most successful capitalists in the world in their criticism of derivatives:

“George Soros, the prominent financier, avoids using the financial contracts known as derivatives ‘because we don’t really understand how they work.’ Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential ‘hydrogen bombs.’ And Warren E. Buffett presciently observed five years ago that derivatives were ‘financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.’”

Pope Benedict XVI has said that when reason is divorced from faith, the achievements of reason—in this case, the mathematical genius that went into devising complex financial instruments that appeared to eliminate risk—are turned against man. In an interview with German media he gave two years ago, the pope warned that “of course we have to learn, acquire knowledge, ability, know-how, as they say… But if we only teach know-how, if we only teach how to build and to use machines, and how to use contraceptives, then we shouldn’t be surprised when we find ourselves facing wars and AIDS epidemics… [W]e need the formation of the heart… with which the human person acquires points of reference and learns how to use the techniques correctly.”

In the article, Goodman explains how Greenspan’s point of reference in assessing the risks of derivatives was his faith—not in God and the wisdom of the ages—but his faith in a radically secularist, anti-common good ideology that put reason in the service of profit, rather than the human person:

“As the long-serving chairman of the Fed, the nation’s most powerful economic policy maker, Mr. Greenspan preached the transcendent, wealth-creating powers of the market.

A professed libertarian, he counted among his formative influences the novelist Ayn Rand, who portrayed collective power as an evil force set against the enlightened self-interest of individuals. In turn, he showed a resolute faith that those participating in financial markets would act responsibly.

An examination of more than two decades of Mr. Greenspan’s record on financial regulation and derivatives in particular reveals the degree to which he tethered the health of the nation’s economy to that faith.”

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By chassup AT 10.09.08 01:33PM Not Rated


Government social engineering, in collusion with global financial corporations, using vice as an incentive, created the current financial crisis.

You can blame derivatives, complicated financial schemes, lack of oversight, etc. all you want, but underlying it all is the simple fact that human liberty was disregarded in favor of selfish interests, by all involved.

I’d like to see a legal wall of separation between market and state along with the re-introduction of religion to the town square.  This is the solution to our conundrum.  Socialism is the problem.

By RickCross AT 10.10.08 02:34AM Not Rated


Angelo:  The last time I checked, Alan Greenspan and Ayn Rand were not on the ballot this November.  So, in light of the totality of Catholic social doctrine, who do you suggest I vote for?  Perhaps, as you, we all should look to the New York Times for guidance.

By jmedaille AT 10.11.08 04:02PM Not Rated


I will vote for Obama. It is not, of course, that I agree with much of what he says, but rather that I fear the alternative. McCain is an honorable enough man—if given enough time—but he is clueless. And he is old. Statistically, there is a high probability that Palin would end up as President. She is not only mean-spirited, but she makes George Bush look like an intellectual.

What I am really afraid of is outright Fascism. As the economy descends into chaos, the gov’t will be tempted to become authoritarian. It may not make a difference who is elected in this regard, but I fear the people around McCain more on this point.

Although Obama is wrong on so many things, I do believe that he is a prudent and thoughtful person who really does have the best interests of the people at heart.

By Dave AT 10.12.08 06:11AM Not Rated


I agree with you that a Obama/Biden administration would be much better than a McCain/Palin administration, however there are other people running for president.

That doesn’t mean that they’ll win. But if all we ever vote for are the liberal or the conservative, how are we ever going to have an actual choice?

Have you considered voting for Chuck Baldwin on the Constitution Party ticket?

By jmedaille AT 10.13.08 02:29AM Not Rated


Robert, In 2000, I believed that there was not enough difference between the two candidates to bother choosing. I voted third party. But the appalling events of the last 8 years, which have driven this country to the brink of moral and economic collapse, have convinced me that I was wrong, that even small differences can have great effects. Whoever takes office on January 20 (assuming they are allowed to take office), will preside over a bankrupt country. At this moment, I am more fearful about the people around McCain, who are the architects of these disasters, then about the one’s around Obama. This may be a naive hope, but at least it is grounds for hope.

By chassup AT 10.13.08 06:32PM Not Rated


There is plenty of evidence to think that either administration poses the potential for outright Fascism, our government is already becoming authoritarian.  Without seeking to defend McCain’s problems, Obama is the closest to a Marxist candidate we have ever had.  If you fear authoritarianism fear Obama and those who control both houses and a judiciary loaded with Obama nominations. 

For me, neither candidate proposes a solution to this country’s economic ills that will make it better… Obama will make it far worse, but the moral choice is clear.  The one candidate in this race you seem to dislike the most—Palin—is the closest thing to an authentic human person running.  I believe, in the end, the root cause of all our problems are directly related to spiritual warfare, and she is the only one speaking about the transcendent as the source of guidance.  Her example concerning her youngest child alone is enough proof that she is more lead by God, not Satin.  I would gladly see our economy worsen to have her close to the seat of power, but I refuse to accept both poverty and evil.  Wealth and prosperity are nothing compared to souls.  Remember, everyone laughed when David came forth.

By Debra Murphy AT 10.14.08 04:36AM Not Rated

Debra Murphy

JOHN MEDAILLE: Delighted to see you in this ongoing conversation. If ever there was need of a true third way, it is in present circumstances.

I, too, am deeply troubled by the turn in the Republican campaign towards wholesale anti-intellectualism and a sort of tribalism, towards brinksmanship. If one considers that a candidate is liable to run the country the way he ran his campaign, it is very disturbing.

McCain seems to be trying to backpedal, but it’s way too late for my vote, and I, too, voted (reluctantly) for Bush in 2004, despite my strong opposition to the Iraq war—- because of the abortion issue, because there was so little between Bush and Kerry on the other big issues, and because Bush at least seemed to have gathered an intelligent team around him. Worst vote I ever cast. And now McCain’s quick-on-the-draw choice of Palin unnerves me to the core.

By Dave AT 10.14.08 05:35AM Not Rated


Palin is right on the pro-life issue. Of that there can be no doubt. But so is President Bush.

The serious consideration of Palin as President is quite scary. If not down right ridiculous.

Now both candidates are not pro-life. Obama is for abortion. McCain is for embryonic stem-cell research and voted for partial birth abortion. So if we are voting for president, then we are in quite a quandary now aren’t we?

By philly-d-kidder AT 10.14.08 11:12AM Not Rated


Dave…Obama Willing to Let Born Infants Perish rather than saving them during a Botched Abortion is TRUE Evil in it’s Most innocent Form!

By Dave AT 10.14.08 04:07PM Not Rated


PHILLY-D-KIDDER - My point is that if we are to take our Catholic faith seriously, then we can’t vote for either candidate. Otherwise, we’ll have to vote for one of them in spite of their pro-choice records, or vote for a third-party candidate all together.

By chassup AT 10.15.08 01:02PM Not Rated


PHILLY-D-KIDDER, John Paul II wrote very eloquently and forcefully on this very subject.  He said one has the duty to vote for the lesser of two evils if that is your only choice.  You have to ask yourself, which is a worse evil in our society today… abortion or any other issue facing the electorate this year? 

Please keep in mind that achieving the best health care system, the most fair immigration policy, the most generous entitlement programs, the immediate end to all military action, the most prosperous economy, the most harmonious political environment at the cost of 1 million+ slaughtered human beings is no bargain.  If all that could be bought for just one good human infant sacrifice, it would still be horribly wrong, and bring no real peace or justice.

This is not radical thinking, this is Christian thinking, and I am weary from hearing arguments to the contrary inside Catholic circles.

By thickcow AT 11.05.08 04:10AM Not Rated


Dear Mr. Matera—

Thank you! I have always been amazed by bios of prominent figures (and they’re none too few), which refer without comment to their worship of Ayn Rand. Huh? Didn’t they get over it after putting “Who is John Galt?” on their high school yearbook page. It’s kooky stuff. That Greenspan believed in the banks’ ability to act in their own best interest is not just naive, though; it’s criminal.


By basil77 AT 02.28.09 08:39PM Not Rated


Your acticle would be laughable, if were it not such a nasty smear. I thought a commitment to truth was part of being Catholic.

Greenspan a libertarian? Libertarians and paleo-conservatives oppose fiat currency and pyramiding of credit. They oppose, almost to a person, existence of the Federal Reserve itself and support a gold standard that makes money honest and not inflatable.

You drag Greenspan’s associations and views 45 years forward to make a dishonest political point.

Politicians and regulators forced banks to make millions of loans to underqualified borrowers. Research Fan/Fred and it’s political contributions and connections…..and how this policy was pushed.

The banks couldn’t knowingly hold these loans, so they were bundled with good loans and securitized, i.e. made derivatives.

And now you come along to relabel this politically correct, socialist policy failure as “libertarian.”

The most intellectually dishonest article I have seen in a long time.

By Bill AT 08.10.09 06:42PM Not Rated


Yes Alan Greenspan got hoisted by his own pitard. For my part I’ll take Greenspan’s objective reason over the absurd and historically failed economic ideology of Barney Frank any day. Five percent unemployment and four percent growth look pretty good right now. Banking crisis will always come and go as regulations, innovations, and unintended consequences come and go. My concern however is with those Catholics that would vote for Obama and thereby endorse third trimester infanticide, placate for another few centuries the monsterous evil of fundamentalist slavery, and think that Marxist axioms (like, “from each each accoding to his ability, to each according to his needs) are anything less than recipes to destroy all rights of man. The democrats would rather have 3000 people killed than tap the phone of suspected terrorists - which is what actually happened but thank goodness Clinton wasn’t a facist. I am frankly sick of the “America is illigitimate” crowd. Unfortunately I expect that when the Obama and Barney Frank acolites finish transforming America by destroying my Grand Mother’s savings via bad, distributionist loans their own petards will be hoisted for all to see.

By accountants leeds AT 06.26.10 07:34AM Not Rated

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My vote for one of them in animosity of their pro-choice records, or vote for a third-party applicant all together. Accountancy jobs Cumbria, Engineering Jobs in Cumbria, Accountancy Jobs Cumbria, Sales Jobs kendal, recruitment agency Cumbria, accountancy vacancies lake district, AAT, CIMA, ACA, ACCA, newly qualified, audit, payroll, credit control.

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