Uncle Sam heading closer to a fresh financial meltdown

The man who brought us the global financial crisis, Alan Greenspan, has spoken out on how to fix the system. Of all the advice he might give, he has given the most unexpected. In essence, he has said: "Don't even try."

In one of the most remarkable statements of our time, the former chairman of the US Federal Reserve has argued that it is inherently impossible to usefully regulate a modern financial system, telling us to relax because "the global invisible hand" of the free market has created a stable economy over the longer run.

Greenspan went further. In an opinion piece in London's Financial Times, he suggested that an ever-growing and unmanageably complex financial system might even be "a necessary condition of growth".

Incredulous, the US congressman who has led the regulatory reform effort, Barney Frank, responded that while many had suggested ways of improving regulations, "until last week no one had seriously suggested that we should have done nothing in response to the financial crisis".

Frank reminded Greenspan of the cost of his failures: "His rosy view overlooks a monumental crisis that threatened the foundations of the American economy, led to soaring unemployment, a continuing foreclosure crisis and weakened economies in the US and Europe."

It is breathtaking audacity that the chief arsonist should scold the fire brigade, saying: "Put away your hoses and enjoy the fire". Even more so because there was a day in late 2008 when he did seem remorseful, accepting that he might have made an ideological error in refusing to adequately regulate banks: "Yes, I've found a flaw.

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