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Source link: http://archive.mises.org/7150/greenspans-mea-culpa/

Greenspan’s Mea Culpa?

September 15, 2007 by

Well, no, it is not exactly a confiteor moment as he appears to spread the blame around quite considerably in his new memoir: The Age of Turbulence: Adventures in a New World.

The New York Times reports that Fed’s Ex-Chief Attacks Bush on Fiscal Role

Bloomberg adds that Greenspan Says Bush’s Economics Driven by Politics

But, what was Greenspan doing when he actually had some power?

Oh, that is right, Penguin Press wasn’t there to pay him $8 million dollars to actually do anything.

Much easier to provide a lot of “tortured” econspeak and then leave quietly in order to pick up the paycheck later and find fault with others.

I have no doubt that Republicans swapped principle for power, but Greenspan bears responsibility as well.


Anthony September 15, 2007 at 10:37 am

Isn’t he largely responsible for the subprime crisis to begin with?

Brent September 15, 2007 at 12:32 pm

Anthony – oh no, “predatory lenders” are responsible… if you ask the usual twits.

I like how the Times fervently writes that “Greenspan reserves his highest praise for Democrat Bill Clinton”. Where is the challenge to Greenspan? Why not? (I realize no one on the Times staff of reporters is capable of thinking of a good question to ask Greenspan.)

Also in the Times, there was a story on Ayn Rand’s legacy in the minds of some CEOs. Considering the publication in which it appears, it isn’t too bad of story IMO.

Bruce Koerber September 15, 2007 at 7:04 pm

Political animals turn on each other and they act viciously when cornered. This is the explanation for both sides of that debate! Greenspan cannot talk (or write) his way out.

The debasement of dragging the economy into the mire of the lower nature of humans (as if we are simply advanced animals) falls upon every single interventionist, without exception. In other words the blame deservedly falls upon all those who meddle with the economy.

Joe Dorner September 15, 2007 at 9:56 pm

Does Alan ever discuss what he used as a guide upon which he based his interest rate adjustments? I ask this because one would think the price of money should be impacted somewhat by the availability of loanable savings. The lower the supply, the higher the interest rate ought to be, all other things being equal, I would think, and vice versa.

Or does he just talk of raising rates when inflation is getting out of control, and lowering it when unemployment or recession is on the rise, the old Keynesian paradigm.?

Is the book a good read?

all the best.

Paul Grad September 15, 2007 at 10:21 pm

Isn’t this the same fellow who helped drive the 3-mo T-Bill interest rate on a fiduciary currency known as the US dollar below 1%? And now he puts all the blame on the current spendthrift. If we have a free-market in nails and silver, why not in interest rates? What a confirmation of Austrian business cycle theory is illustrated by the current situation. Rothbard would have called the Northern Rock run “beautiful”.
They can try to expand credit, but they can’t force people to borrow. And debt must be serviced.

Bow to Saint Greenspan September 16, 2007 at 9:03 am

The NYT and the rest of the media is simply afraid of the blowback on the Federal Reserve System from tarnishing the reputation of a person whom they previously sainted. The fact that the Saint’s policies have helped none and the only thing saving the economy was its sheer size is of no consequence. Now as the Saint’s altar boy flounders with EXACTLY the same policies people are blaming the other half of the issue (The kill em all president and the spend it all congress) instead of reconsidering the holiness of the Saint and his church the Federal Reserve System.

Socialist Liberals and War Mongering Conservatives love the Fed as they get to pay off loans with future money of less value than current money.

Lee September 17, 2007 at 11:04 am

Alan ‘pull the ladder up, Jack’ Greenspan provides yet more resource as to why history will remember him for exactly the wrong reason.

Despite the rent-seekers ball that Western civilisation has lowered – nay, degenerated to -in this past century, it remains naive to account his failure to purely political pressure and priority, ala some kind of forgotten General in a far-off battlefield.

Instead, let’s take the Northern Rock debacle as a great example of our time and argument: governor of the Bank of England (the world’s first central bank, remember, establish by William I solely to bankroll his wars against France) Mervyn King ignores the pleas of business leaders by publishing an open letter stating in no uncertain terms that banks would simply have to “price in risk” in the future.

So started the domino effect; within hour’s bankers, who’d established their strategies whilst gossiping at the coffee machine, buoyed by over-doses of caffeine and free money, were issuing profit “warnings”.

Alas, Northern Rock looks certain to become the biggest bankruptcy in all history – larger than even Russia’s humiliating appeal to the WMF in the 90′s.

Destruction leads to a very rough road, but it also breeds creation. Aside from being marvelous lyrics from a Red Hot Chili Peppers’ track, lets hope that the second-rate economists who hold sovereignty over our economy learn some lessons. Don’t hold your breath though.

Oh, and as for Mervyn King, unlike Greenspan, he’s still in a job, despite his critics lambasting him as “Victorian”, referring, with unacknowledged irony, to the time in British history when even the army and navy were run privately.

So Alan Greenspan might not be able to claim that his actions forced people to queue around the block in miserable rain overnight to withdraw their life savings, but he’ll also not be able to claim he stood for principle or common-sense in any area of importance.

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