Alan Greenspan, Richard Posner Duel Over The Causes Of The Financial Crisis

The Daily Dish:

I have received an email from Alan Greenspan in which he expresses regret at what he describes as my "rather thin analysis of the source of the current financial crisis." He states that his "view is different," and by way of explanation prints excerpts of three pieces written by him. The first is from remarks, entitled "Risk and Uncertainty in Monetary Policy," that he made at a meeting of the American Economics Association in January of 2004, while he was still chairman of the Federal Reserve and the housing bubble was expanding.

Read the whole story: The Daily Dish

Comments

[lvdragonlady]

This mess was caused by 2 things. Greed and deregulation, it is as simple as that.

[LeeCalif]

" Greenspan thinks ....... "

" Greenspan feels that ...... "

Who cares.

[Alvin4NY]

Both of them got their tips from Jim Cramer.

[DamaskinosLives]

I do not see how monetary policy can be the main culprit when the government effectively rescinded taxing profits on home sales and also allowed babysitters earning $10/hour to claim half million dollar incomes to buy mansions - both of which artificially fueled demand.

This whole debate is only interesting because it illuminates the mob reflex of finding someone - anyone to blame.

The FED is just a small part of the Executive branch. The Executive and the people running Congress have far more power.
.

[Bettysdad]

The cause of our calamity was Alan Greenspan's failure to recognize that Ayn Rand was insane.

[Lilith33]

Greenspan wanted the deregulation and fought for it.He saw the bubbles and did nothing.Hi­s first loyalty was to the banks!

[somsoc]

Alan Greenspan set in motion the now infamous 'trickle-down' economic policy with Bon.zo Reagan at the helm. Bon zo could not spell policy much less understand it, he championed whatever was told to him by the neo-cons that surrounded him (when he was awake that is). Greenspan advised Bon.zo to put in place the greatest tax hike for the middle class and tax cut for the upper 5% in history and sell it as a tax cut 'for the people' and America bought the story, hook, l!e and sinker. The trickle down, welfare for the rich, mentality that began with Greenspan and Bon.zo was the foundation that was to become the economic disaster we now face. G. Dum.bya Bush just pushed it over the edge, but it would have happened with or without his assistance.

Demand side economics, not supply side is what works. It does not take a 5yr old to figure that out.

[schatsie]

and the MSM assisted in the brainwashing, specially Fox, but we all know that ....Now thank heavens we have the internet..­..

[rabiddog6708]

Greenspan will never admit his culpability in the meltdown and all his future analysis is tainted by this.

[vegasobserver]

Not only is Greenspan culpable, he is so largely at the behest of Bush, who egged him on, trying to keep interest rates as low as possible after 9/11, so as to avoid a serious recession.

I said even back then that the economy should have been allowed to go into a deeper recession then, but Bush didn't want this on his watch as he believed it would harm his reelection prospects.

Bush and Greenspan obviously had a pact to keep rates low and allow the housing/credit bubble to continue to expand, creating a falsely inflated 'prosperity', all to help Bush politically.

[CAPTAINSKIPPY]

Take notes for your grandchildren and their grandchildren if you want to stop the feudal cycles of plundering and enslavement.

[jrintels]

The problem with Greenspan's analysis, as well as Posner's response, is that neither acknowledges that the subprime debacle was caused to a great extent by adjustable rate mortgages that were originated and then reset based not on long-term interest rates, but on shorter term rates -- some as short as 3 months, 6 months, or one year. These adjustable mortgages were directly tied to and influenced by the Fed Funds rate. The fact that the fed funds rate was so low during this period, combined with almost no money down and no verification of employment or assets, allowed many to qualify for mortgages who would not have qualified previously. Which was cheered by Bush and Greenspan -- until the bubble burst. Now, its Cover Yer Tail.

[Sandmanj]

Greenspan has lost any credibility he ever had, which was very little, as aside from interest rate issues, which he never understood, he always pushed for deregulation on ideological grounds, being a Chicago-school "free market" purist which encouraged the greedy, irresponsible behavior of the banks which drove the economy into the ground.

[Christian]

BINGO!

[judiNJ]

The free market is NOT free!

[Rule Of Law]

Why sure it is--

Free from ethics
Free from truth
Free from rules
Free from accountability

[tippydog11]

so is bush!

[LITU]

The day I learned that Greenspan was an adherent of Freidmanism was the day I saw the light. I'm not a scholar or well-versed in the Chicago School of Economics ethos, but I'm old enough to have witnessed many sides of the equation, and Freidman vis-à-vis Greenspan was absolutely on the wrong side.

[TJCole]

The Cause was Arrogance, Greed and a complete absence of Financially Sound and Ethical Practices.­..!

Ok Alan; so now you know...!

[sheilaofmiami]

I don't care what either of these two have to say about the economy any more.

Greenspan was completely wrong, and said as much to Congress in 07 or 08, I forget.

I want to know when those in power will see what is really going on and take off the rose colored glasses they keep using.

[higgins1990]

And after their duel they discussed the latest in fashionable eye-glasses.