The article "Greenspan Concedes That the Fed Failed to Gauge the Bubble", in The New York Times catch my interest. Alan Greenspan, the former Federal Reserve chairman,state that “For years the Federal Reserve had been concerned about the ever-larger size of our financial institutions” and he warned that big bank potential for “unusually large systemic risks”. In this article, Greenspan accepted that central bank failed to diagnose the housing bubble. However, he did not think that interest policy has a problem. He suggest that higher capital requirements and liquidity ratio were the crucial policy prescription. On the contrary,some people argue that argues that a global housing bubble was primarily caused by a sharp drop in long-term interest rates from 2000 to 2005 but Greenspan refuted this arguement.
In my opinion, I think every participants in the financial market take part in financial crisis. According to Liu article, financial companies on wall street have moral hazard. They take too muck risk in thir business for their large profits. Moreover, the regulator failed to monitor the problem and take action to limit financial institute risk exposure. Therefore, the participants take parts in causing financial crisis.
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References
Chan, S. (2010, March 18) Concedes That the Fed Failed to Gauge the Bubble. The New York Times. Retrieved March 19, 2010 from http://www.nytimes.com/2010/03/19/business/economy/19fed.html?ref=business
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