The good news is, Alan Greenspan has seen the light. The bad news: It's a tail light of the steamroller that just pancaked us into the pavement.

Bloomberg quotes the ex-Fed chief as admitting (gawrsh!) deregulation and the Cult of the Free Market - time-bomb ideas he helped wire - may have been (how shall we put it?) ill-advised:

"'`Yes, I found a flaw,' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``That is precisely the reason I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.' 

"Greenspan said he was 'partially' wrong in opposing regulation of derivatives and acknowledged that financial institutions didn't protect shareholders and investments as well as he expected.

"'We cannot expect perfection in any area where forecasting is required,' he said. 'We have to do our best but not expect infallibility or omniscience.'"

Gotta love that - he found the flaw. More accurately, the "flaw" came panting up at a dead run and kicked him wrecking-ball-hard in the ass. And, he's only "partially" wrong. 'Course... that was the partial where we kept our money!

Some in economic circles have been capping on Greenspan for years, over not just his abandonment of regulation, but also his tendency to keep interest rates artificially low and the markets hot. As The Daily Reckoning blog notes in "Greenspan's Bubble,"

"House prices have been running up in France, for example, at nearly the same rates as in America. But in France there is very little mortgage refinancing...or 'taking out' of equity. The European Central Bank was repeatedly urged to lower rates in line with those in America. It refused to budge. Without falling rates, there was no 'refi boom.' Nor were European banks offering 'home equity lines of credit.' Property could run up... and run down... and the only people who cared would be the actual buyers or sellers, who either cursed themselves or felt like geniuses, depending on their luck.

"But in Greenspan's bubble economy something remarkably awful happened. Householders were lured to 'take out' the equity in their homes. They believed that the bubble in real estate priced created 'wealth' that they could spend. Many did not hesitate. Mortgage debt ballooned in the early years of the 21st century - from about $6 trillion in 1999 to nearly $9 trillion at the end of 2004. Three trillion dollars may not seem like much to you, dear reader. But it increased the average household's debt by $30,000. Americans still lived in more or less the same houses. But they owed far more on them."