Alan Greenspan, former head of the US Federal Reserve, says regulators saw the risky problems that eventually caused the global credit crunch.
But, concerns about complex and risky financial deals were not acted on because only very wealthy people invested in them, he told the BBC in a London radio interview. “We did know what was going on and the reason we didn’t stop them was that to a large extent these types of questionably egregious actions are taken by people who have their own money invested,” he said. He called hedge funds “presumably the largest culprit of all of this.” Greenspan said he is increasingly pessimistic about the world economy, though he sees the risk of recession at “still less than 50-50,” and predicts that the era of low inflation is coming to an end. (m&c.com)