Green or Greenspan

AMSTERDAM – When forced to explain why so few anticipated the global financial crisis, former US Federal Reserve Chairman Alan Greenspan blamed “animal spirits,” investors’ herding behavior, unimaginably large tail risks, and black swan events. In other words, he absolved the money managers and financial institutions that had been taking massive risks on the assumption that overvalued assets could be passed on to less-informed market actors, their own shareholders, and, ultimately, taxpayers.

When it comes time for global leaders to defend their decades of inaction on climate change, which is set to trigger an environmental and economic crisis on an unprecedented scale, their defense may well look a lot like Greenspan’s. And it will be just as unconvincing.