On Greenspan

From today's WSJ:

Mr. Greenspan was asked when he knew there was a housing bubble and when he told the public about it. He answered that he never anticipated home prices could fall so much. "I did not forecast a significant decline because we had never had a significant decline in prices," he said.

What kind of reasoning is that?? Now I am in "shocked disbelief".

If the best experts were not able to foresee the development, "I think we have to ask ourselves, 'Why is that?'" Mr. Greenspan said. "And the answer is that we're not smart enough as people. We just cannot see events that far in advance."

He continued, "There are always a lot of people raising issues, and half the time they're wrong. The question is what do you do?"

Well, he does have a point. But given that fact, we shouldn't be building a fortune on a penny and leveraging our future safety on the expectation of everlasting stability and good luck. Given our inability to predict the future I would prefer the Fed and Co. plan for the worst, not the best.