As much fun as it's been to poke at Ben Bernanke, let's not forget how his predecessor, Alan Greenspan, narrowly escaped a situation that was brewing to blow up (in a big way) when he retired.

No wonder Greenspan has been on the defensive about the legacy of his policies while he was chairman of the Federal Reserve. He was around when The Consumer Feeding Frenzy first started floating the economy. Of course, that phase was also unsustainable, kind of like "over-fishing" or "paving the rainforest to build a massive strip mall."

"A man's home is his castle ... and his ATM"
Greenspan should not be blamed for the entire debacle we're facing now, but his recent attitude, which seems to be, "How could I have known?" falls a bit short on logic. I mean, come on, he's a smart guy.

And many of us felt things were getting out of hand on many levels, given the years of rampant and escalating speculation in housing, even as many experts insisted there were no problems. For example, Foolish colleague Seth Jayson was writing articles with strong warnings and good advice in the summer of 2005. 

Pushing home prices to ever more bubbly heights in many parts of the U.S. was only the beginning of fiscal abandon. The consumer spending frenzy we've been on for the last several years was also fueled by the growing idea that it made financial sense to make up for shortfalls in income or discretionary spending by siphoning home equity or borrowing against it (maybe not so swift in a society where savings rates are abysmal?). Anybody can see why this was dangerous -- with home prices growing ever more outlandish in their upward trajectory, the old conventional wisdom that "home prices can never go down" didn't seem like gospel to some of us, but obviously not enough of us.

A glance at the charts of companies such as Countrywide Financial (NYSE: CFC), Bear Stearns (NYSE: BSC), Toll Brothers (NYSE: TOL), and Washington Mutual (NYSE: WM), just to name a few, paint an ugly picture of what has come to pass. They were on the front lines of a lot of the craziness. Of course, many companies will suffer from the credit and housing crisis hangovers we're experiencing now.

Excuse me, but I need a moment of levity. Can you think of some examples of the disturbing nature of consumerism as a competitive sport in the past few years? I think I can, with a few fun pop culture references to boot:

  • Harley-Davidson (NYSE: HOG): Hey, everybody wants to be a road warrior, right? Whether they're really born to be wild or not. Perhaps, by extension, we could also thank the era of the crazed consumer for flicks like Wild Hogs, which definitely ain't no Easy Rider.
  • General Motors' (NYSE: GM) Humvees: Every time I see one, I wonder what the deal is: Does the owner expect urban (suburban?) warfare at any minute? Maybe they'll come in handy in some post-apocalyptic, Mad Max-esque scenario, when "going to get gas" means running over other motorists and then looting their fuel ("I am the Nightrider. I'm a fuel-injected suicide machine. I am the rocker, I am the roller, I am the out-of-controller!"). But judging by the current prices at the pump, I think I hear a giant sucking sound.
  • Crocs (Nasdaq: CROX): Colorful. Ugly. Everywhere. Maybe they were one of the four horsemen of the consumer spending apocalypse. In the flick Idiocracy, Luke Wilson's character was shod in what looked suspiciously like a pair of Crocs when futuristic dunderheads tried to execute him in the gladiator pit. Talk about a dystopian future.

Back to your previous programming
The remarkable resilience of the consumer -- and consumer spending -- was most remarkable in its lack of sustainability. Consumers boosted their perception of wealth rather than their real financial well-being.

So it's odd that Greenspan had the presence of mind to caution, famously, about "irrational exuberance" during the dot-com bubble, yet I don't recall that he did very much in the way of cautionary statements while the housing market and its related expenditures (not to mention obligations, such as ARMs and interest-only loans) careened out of control. Anybody remember the post-dot-com-bust glassy-eyed mantra, "Well, at least the housing market is doing well!"?

Sure, blame Bernanke -- I'm not too thrilled with the state of the free market right now either. (And of course, some people think blaming the shorts is a good idea, but that's hooey when there's tons of irresponsibility to go around.) We are most certainly in a mess right now, but the seeds of our current crisis were sown and sprouting long before Bernanke's reign. So maybe we should blame Greenspan, too. It takes a village, after all.

Of course, as long as the blame game is on, let's not forget all the self-serving, short-term thinking that's been rampant across the board, leaving us all in need of a massive reality check. Greenspan should have seen this coming long ago, and he should have offered a litany of "whoa-put-on-the-brakes-and-count-to-10" statements concerning housing, debt, and the consumer, in no uncertain terms.

Maybe the real question -- the tougher one -- is whether anybody should have had to be told in the first place.