By Vern Gowdie – The Gowdie Letter (Australia) –
‘…not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient. Individual institutions’ portfolios have become better diversified. Furthermore, risk is more widely dispersed, both within the banking system and among other types of intermediaries and institutional investors.’
Alan Greenspan, Conference on Bank Structure and Competition, May 2003
‘For my own part, I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking systems, the S.I.V.’s – I didn’t see any of it coming until it happened.’
Janet Yellen, in testimony to the Financial Crisis Inquiry Commission, 15 November, 2010
These are the people who are trusted with safeguarding the financial system. How could they not see the significant and obvious risks building within the system? It’s not like a debt crisis has never happened before.
Given their pedigrees and PhDs, Greenspan, Bernanke and Yellen should have been among the first to identify from a mile away the economic equivalent of an oncoming bright yellow steamroller with flashing lights.
Yet they completely missed it. Misplaced trust and faith can cost you dearly. That is why history is on a replay loop.