Monday, April 5, 2010

Greenspan vs. Burry

Michael Burry (of Big Short and Scion Capital fame) wrote an op/ed in the NY Times that was highly critical of Alan Greenspan. In it Burry wonders how, and why, Greenspan couldn't see the housing bubble coming -- which are fair questions. And it would be fine if Greenspan let it die there, since his reputation is already in tatters, but the former Fed Chairman digs himself in deeper (video below).
By claiming Burry's a statistical anomaly and saying Burry (and others) got lucky, Greenspan's defending himself like a six-year-old; a six-year-old who doesn't realize that the fact that he was wrong is not as important as recognizing his wrong-ness so it can be addressed -- something that ensures future mistakes don't happen again.
I think it might help if someone reminded Greenspan that Irving Fisher salvaged his reputation after he was colossally wrong about the 1929 crash. And in the process of recognizing and addressing his mistake he helped shape future policy.

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