“The Master,” Alan Greenspan, yesterday admitted he made a “mistake.” We wonder if this is the first of such admissions from the former Fed head. Speaking to Congress, the one-time gold bug and Ayan Rand acolyte, said he had found “a flaw in the model” that he perceived “is the critical functioning structure that defines how the world works.”

– Greenspan said it was a “mistake” to believe that banks operating in their self-interest would be enough to protect their shareholders and themselves. He also called the current crisis “once in a century credit tsunami” that he and other policy makers didn’t see coming.

– Isn’t that the problem with policy makers in the first place? They never see things coming. That Greenspan claims not to understand the cause and effect relationship between artificially low interest rates over protracted periods of time and asset bubbles simply isn’t believable.

– The results of Greenspan’s shortsightedness are easy to spot. Yesterday, Bloomberg reported that “U.S. foreclosure filings increased 71% in the third quarter from a year earlier, the highest on record.”No that’s not a typo. In just three months, a total of 765,558 Americans got a default notice, were warned of a pending auction or were foreclosed.

– Addison Wiggan and Ian Mathias put it bestin The 5 Min. Forecast, one of the best sources of market insight on the internet, “All things correct in due time, we’ve noted on occasion — even the reputations of men.”

– The full force of the meltdown in mortgages is now hitting jobs hard. “In September,” reports The Washington Post, “there were more mass layoffs than in any month since September 2001 … And nearly half a million Americans have filed new claims for unemployment benefits in each of the past four weeks, the highest rate of such claims since just after the terrorist attacks seven years ago.”

– “Disturning trends” are showing up in the banking system, says MarketWatch’s David Weidnera. He’s dug up a study by IBM of the thinking of financial pros over time. The preliminary results don’t exactly inspire confidence.

The No. 1 issue that keeps bankers and financial professionals awake at night is a lack of strategy – or, as Duncan put it, a “business model identity crisis” — according to nearly 80% of board and C-level executives. “They don’t know what they want to be when they grow up,” Duncan said.

The other 20% are just worried about surviving.

Financial executives are disturbingly out of touch with their clients. That could be institutions, “average Joes,” as Duncan called them, or trading partners — really anyone who pays money to a bank or financial firm.

– This monring, Dow futures are looking really ugly. The Wall Street Journal is calling it a “precipitoius drop.”

U.S. stock futures pointed to another precipitous drop Friday, as a wave of profit warnings sent stocks plunging in Asia and Europe.

December futures in the Dow Jones Industrial Average and S&P 500 both fell by the maximum amount allowed, a further sign of extreme market stress.

More than two hours before the start of trading, S&P futures remained locked at 855.2, a fall of 60 points. DJIA futures, earlier at limit down at 8224, a 550-point fall, were seeing intermittent trade a few points above this level.