The deficit hawks think we are so stupid we’ll once again fall for the Greenspan shell game: raise Social Security taxes and put the excess in a Trust Fund so it will be there when we need it. The President should be ashamed of himself, appointing this bunch of charlatans to deal with the non-problem of Social Security.

When Peter Peterson’s anti-Social Security propaganda organ openly criticized Alan Simpson for his insulting comments to Alex Lawson, calling Simpson “condescending and derisive–and wildly wrong about important parts of the Social Security system’s past,” you knew they were worried about a lot more than Simpson’s typical bullying tactics and yet another disqualifying “macaca moment.”

The New York Times front page editors waste our time with an above the fold piece in which Peter Baker ponders how unusual it was for President Obama to say “I was wrong,” since none of his predecessors could manage much more than “mistakes were made.” But wrong about what?

Sometime Tuesday the Senate may take up an amendment to the Senate financial reform bill that would require the Government Accounting Office to conduct an audit of the operations of the Federal Reserve. The outcome is much in doubt, but it shouldn’t be.

Suffer the high-minded intelligentsia at the Federal Reserve, veritable Knights Templar of the financial universe, who struggled mightily to brace the gates of Wall Street against the barbarian onslaught of American consumers, those Wal*Mart Philistines who were too feeble-minded and innumerate to grasp the intellectually lofty arcana that was the synthetic CDO-backed housing bubble they unwittingly helped expand. . . .

In 2004, Alan Greenspan argued the Fed should keep worries about a growing housing bubble secret because the chumps buying the houses were too stupid to engage in a debate about whether there was a bubble or not.

Senator Carl Levin (D-MI), whose Permanent Subcommittee on Investigations last week revealed major mortgage fraud at Washington Mutual, apparently has more up his sleeve for Goldman Sachs.

Born, who pushed to strictly regulate derivatives under the Clinton Administration, but lost the battle to, among other people, Alan Greenspan, told the former Federal Reserve chair that his agency “failed to prevent housing bubble, failed to prevent the predatory lending scandal, failed to prevent the activities that would bring the financial system to the verge of collapse.”

Stability is the primary purpose of financial regulation. Efficiency is a distant second. Too bad for all of us economists and the likes of Alan Greenspan got it backward.

Alan Greenspan once admitted that there was a flaw in his thinking about markets. Now he falls back on failed theories and false talking points to defend his failure to act.