Thursday's page 3,000-word front- analysis by economics reporter Peter Goodman, "Taking Hard New Look at a Greenspan Legacy," is the latest in a long line of Goodman storieswhich border on gloat-fests over the failures of free-market capitalism.
Goodman is perhaps the most left-wing of the Times' economics reporters (Louis Uchitelle, who compared today's panic to the Great Depression in a video posted on nytimes.com, is a more old-fashioned New Dealer by comparison.) These panicky times are definitely clover for someone of Goodman's worldview. While Congressional Democrats shoulder most of the burden for failing to reign in Freddie Mac and Fannie Mae when regulation was proposed in Congress, the only bad guy in Goodman's sights is free-market capitalism, as represted by Alan Greenspan, the former Federal Reserve Chairman.
First, he cued up three liberal billionaire financiers to look wise about the dangers of derivatives, before segueing to Greenspan, whose blind faith in derivatives apparently led us to this precipice.
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."
Speaking of irresponsible investments, Goodman doesn't say anything about the infamous "Black Wednesday" of 1992, in which George Soros' currency market speculation made him known as "the man who broke the Bank of England."
One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives - exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. "What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so," Mr. Greenspan told the Senate Banking Committee in 2003. "We think it would be a mistake" to more deeply regulate the contracts, he added.
Today, with the world caught in an economic tempest that Mr. Greenspan recently described as "the type of wrenching financial crisis that comes along only once in a century," his faith in derivatives remains unshaken.
The problem is not that the contracts failed, he says. Rather, the people using them got greedy. A lack of integrity spawned the crisis, he argued in a speech a week ago at Georgetown University, intimating that those peddling derivatives were not as reliable as "the pharmacist who fills the prescription ordered by our physician."
But others hold a starkly different view of how global markets unwound, and the role that Mr. Greenspan played in setting up this unrest.
This sentence is particularly thudding left-wing boilerplate:
Over the years, Mr. Greenspan helped enable an ambitious American experiment in letting market forces run free. Now, the nation is confronting the consequences.
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.