BUSINESS

The Economist Knocks Alan Greenspan: 'He Had The Power'

04/14/2009 05:12 am ET | Updated May 25, 2011

ALAN GREENSPAN's defence of the Federal Reserve in the formation of the housing bubble restates a familiar argument--it raised short-term interest rates but long-term interest rates did not follow, and housing is most sensitive to long-term rates. His proof includes the fact that long-term rates were low worldwide, and that many countries had bigger housing bubbles than America. The housing bubble's source must therefore be global.

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