On ABC’s This Week yesterday former Fed Chairman Alan Greenspan once again pulled out the “nobody saw it coming” excuse for missing the conditions which led to the financial meltdown in 2008:

“…the reason it was missed is we have had no experience of the type of risks that arose following the default of Lehman Brothers in September 2008.That’s the critical mistake. And I made it. Everybody that I know who works in this business made it.”

False on many fronts. First, the “no experience” myth. The collapse of Lehman Brothers in 2008 was predictable, or should have been, by the failure of Long Term Capital Management in 1998 because both were brought about by similar business practices. Both had debt that far exceeded their assets and both were major players in the mortgage backed securities “shadow market.”

The other thing that “everyone” missed, according to Greenspan and his fellow revisionists anyway, and what was driving the mortgage backed securities explosion, was the housing bubble. Again false. Economists from Paul Krugman on the left to Reagan administration Treasury Department official Bruce Bartlett on the right were warning of the impending disaster in the housing market.

But putting aside economists for a minute, it shouldn’t have taken a Nobel Prize in economics to see that a 50% increase in home prices from 1995-2005 was unsustainable. Or that giving a $500,000 loan to someone with no documented income was not a good idea. Or that adjustable rate mortgages, 100% financing, interest-only loans, and all the other exotic mortgage variations were an accident looking for a time to happen. What was Greenspan saying at the time?

“Federal Reserve Chairman Alan Greenspan said Monday that Americans’ preference for long-term, fixed-rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives…He said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs.”

No, Mr. Greenspan, not “everybody” missed it. YOU missed it. You and the disciples of the group-think mentality in Washington who were afraid to buck you because of your position as the alleged “Maestro” and “Wizard” who was responsible for the supposedly booming economy which was in reality a house of cards. Unfortunately two of those disciples, Ben Bernanke and Timothy Geithner, are still in decision-making positions.

Just as a side note, there could be some fireworks at the Financial Crisis Commission hearings this week. Greenspan is set to testify on Wednesday and Don Robert Rubin-leone is up on Thursday.