As the housing market economy continues to show problems (although some argue it isn’t that bad) as evidenced by the sharp drop in confidence, voices from the past are popping up.

I have been struck by the notion that virtually nothing has been done to fix the credit markets, the core of the current economic problems that will prevent a rebound of housing markets across the country until credit is fixed.

In part, that is because there is a scarcity of ideas. Paul Volcker, the former Federal Reserve chairman whose legacy has not crumbled since he left office, was right this week when he said the financial engineers had created “a demonstrably fragile financial system that has produced unimaginable wealth for some, while repeatedly risking a cascading breakdown of the system as a whole.”

With Paul Volker, the Fed Chair pre-Greenspan who rightly suggests that we can’t return to a financial market that existed before electronic trading and securitization and Greenspan working hard to fix his legacy of creating a credit bubble and current chair Bernanke who is stuck with the problem, it’s getting crowded on the lecturn, podium and talk shows.

Volker is starting to look like the new zen-god of the financial system simply because Greenspan’s reputation has quickly unraveled (why did I buy his book?).

In an interesting juxtaposition of events in recent days, the two former Fed chairmen collided in the headlines. Greenspan, who left the Fed two years ago, took to print and television media to defend his battered reputation. Volcker, in two rare, back-to-back speeches, gave a critical assessment of the current economy and the Fed’s role in creating and managing the crisis. Their styles have always contrasted, now and when they were at the Fed. Economists say Greenspan is as much a politician as he is a policymaker – always looking for opportunities to claim the spotlight – a tactic that may be hindering rather helping his reputation now. It’s just the opposite for Volcker.

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