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Econ 101 reminds us that psychology, in the form of "confidence," plays a large role in the economy; why do they call economic crises "panics"?



As the World economy teeters on US debt, Federal Reserve (Fed) Chairman Alan Greenspan spoke on Capitol Hill. He acted unethically again by taking detailed positions on social policy issues, which are not the perview of the Fed. He's being blasted at a time when people are awakening to the fast growing economic instability. Here are a few examples:

New York Times editorial: "his familiar act of fealty to Mr. Bush: a vague endorsement of private accounts for Social Security>"

Princeton economist Paul Krugman asks "Does anyone still take Mr. Greenspan's pose as a nonpartisan font of wisdom seriously?"

Cartoonist Tom Toles "mocked Greenspan as a Bush stooge." Knight Ridder

Knight Ridder reports "Greenspan comes under unprecedented political fire"

Yahoo News Carries Headline about Greenspan under fire.

Blogger The Daily Kos put out the word to "unleash the blogosphere" to dig up dirt on "St. Alan."

Senate Minority Leader Harry Reid, called Greenspan "one of the biggest political hacks we have in Washington."

And the beat goes on.

Source: Extracted from Knight Ridder, and Krugman piece.