The past two years the global economy has been rocked by violent turbulence with its root causes in the uncontrolled sub-prime mortgage fall out. With the concept of spreading risk via new financial instruments such as CDO (Collateralized Debt Obligations) and CDS (Credit Default swaps), many financial institutions literally created a fiscal time bomb that could not be defused. As the mortgage crisis began to unfold, the global economy was literally on the brink of collapse. With massive bailouts and heavy tax-payer funded government intervention a second great depression has been avoided or at least delayed.
Some economists partly blame Alan Greenspan and his policies as head of the Federal Reserve (FED). In fact Greenspan himself publicly admitted that the US free-market ideology that he and others have championed for decades may be flawed. Greenspan, in his testimony before the US House Committee on Oversight and Government, said he was shocked at the banks' inability to self-regulate and blamed over-eager investors for the sub-prime housing meltdown that led to the financial crisis. Obviously the low interest rates that the FED pushed during his time as the head of the institution was partly to blame for the crisis. But the FED alone is not the sole perpetrator of the near fiscal collapse. There were a number of other parties who bet their banks on financial instruments that they had no idea about.