From the Wall Street Jounal:
His Legacy Tarnished, Greenspan Goes on Defensive
Future of U.S. Financial Reform Is at Stake; ‘I Am Right’
By GREG IP
April 8, 2008; Page A1
WASHINGTON — Alan Greenspan’s reputation is under siege, and he’s incredulous.
Hailed three years ago as “the greatest central banker who ever lived,” the retired chairman of the Federal Reserve now is being criticized for his management of the U.S. economy before he retired in 2006. The Fed’s low rates and laissez-faire regulatory oversight during his final years are widely blamed for sowing the seeds of today’s financial crisis — one that began in the U.S. housing market and is now battering banks, stock markets, borrowers and consumers around the world.
For much of his 18 years atop the world’s most-influential economic institution, Mr. Greenspan was lionized for the economy’s performance. Now, he notes, he’s being second-guessed for it.
“I was praised for things I didn’t do,” Mr. Greenspan said during one of three interviews at his sun-drenched office in downtown Washington, D.C. “I am now being blamed for things that I didn’t do.”
Now 82 years old, Mr. Greenspan wants to set the record straight before the ink dries on the first draft of the financial crisis’ history. The former Fed chief doesn’t deny that he cares about his reputation. But the larger issue at stake, he says, is getting the lessons of the crisis right.
“The [wrong] evaluation of this period — and how to avoid the problems associated with it — will give you the wrong answers and the wrong policies,” he says.
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Mr. Greenspan now admits he was wrong about the improbability of a housing bubble. Yet he has long maintained that bubbles are an unavoidable feature of a dynamic economy. He pulls out a 1999 speech and shows, underlined in green marker, passages in which he warned of recurring but unpredictable patterns of overconfidence followed by investor panic. He does not share some foreign central bankers’ belief that their job is to defend against excessive asset-price inflation: No sensible policy, he maintains, could have prevented the housing bubble.“I am reasonably certain that I am right here,” Mr. Greenspan says. If proved wrong, he says, “I will change. I do not have a vested interest in holding wrong ideas.”
“No sensible policy..”. I guess he means a policy that would have rejected unqualified buyers with no income, no money down and a fraud record.
Yea, that’s not sensible. It would have prevented the fraudulous growth of the last 5 years of Greenspan’s tenure. He is defending his reputation at the expense of thousands of people who lost their credit reputation. Oh, wait or is loosing your home more important? Not according to mr. Greenspan. You decide who should loose their reputation. Stop buying his book to start with. Oh, gosh he probably took a mortgage out on the projected income of his book. Poor mr. Greenspan….
“I am reasonably certain that I am right here,” Mr. Greenspan says. If proved wrong, he says, “I will change. I do not have a vested interest in holding wrong ideas.”
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I would say he has a vested interest in upholding his reputation. He will never change because as a laissez-faire capitalist it would prove he was a bad fed chief. Kudos Greenscam, you have screwed up America.
“Bubbles are an unavoidable feature of a dynamic economy….No sensible policy…could have prevented the housing bubble”
This is from the head of a group that agonizes over the choice of words in their 5-paragraph monthly missals – because they don’t want to spook the market. Yet, there is no way for them to talk down confidence. Oh, I’m sorry. There is no way for policy to bring down overconfidence…except for that whole quickly increasing rates thing, which he never attempted.
“If proven wrong, I will change
Translation: I’m 82 years old, bitches. You’ll never prove me wrong while I’m alive. At least never with Government-issued statistics.
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