Alan Greenspan's "Don't Blame Me" Tour

Former Fed Chairman Alan Greenspan is traveling the world telling anyone who will listen that he is NOT to blame for our current woes and that all those who say otherwise are nasty and unfair (In case you missed it, our government and financial intelligentsia have conveniently decided that Greenspan is responsible for all of today's economic and monetary problems).

How's Greenspan's "don't blame me" tour going? Let's be the judge.

But first, an overview of the alleged failings that Greenspan is trying to deny responsibility for:

* An easy-money policy that contributed to the stock and housing bubbles and runaway inflation.
* A convenient inability to spot "bubbles" until they had burst (when he couldn't be blamed for bursting them).
* A blessing of the adjustable-rate mortgages that have now hosed so many homeowners.
* An assessment that the housing market was just seeing "a bit of froth" when in fact it was experiencing a nationwide disaster in the making.
* An insistence that Wall Street derivatives and sub-prime mortgages shouldn't be regulated, a policy that arguably contributed to the current credit crisis and collapse of Bear Stearns.

Does Greenspan deserve all the criticism he's been getting? Of course not. This is not a command-and-control economy, and lost in the scapegoating are the consequences that Greenspan's policies arguably helped avoid (such as economic collapse, deflation, etc.) Does Greenspan deserve SOME criticism? Absolutely. In hindsight, some of his policies and decisions were dumb, and he should have been much quicker to admit this.

But on to the "Don't Blame Me" tour...

Alan, grow a thicker skin already. Of course politicians are going to blame you--that's what politicians do. Of course your critics are going to be brilliant in hindsight. Of course those who were formerly lionized will be transformed into scapegoats. WHATEVER.

You held one of the most important and powerful jobs in the country for nearly two decades. Over most of that period, the country experienced solid growth, low inflation, and solid markets. You made your choices, and you did your job--and, overall--many people would argue that you did it well.

So stop the point-by-point rebuttals. Just smile, acknowledge that if you had it to do all over again you might do some things differently (who wouldn't?), and remain statesman-like and above the fray. Otherwise, even your die-hard fans will soon be scratching their heads and saying, "methinks he doth protest too much."

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Comments

[dtal311]

I rememeber watching Greenspan on CSPAN when he spoke to congress. He would consistently say the same thing: Americans are not SAVING enough money. Again, Americans are not saving enough money. We need to encourage the public to save more and balance their spending habits. He reiterated more then once his concern over people pulling equity from their homes,
Bottom line – to easy to blame him for the consumer foil that the American public bought into and is still perpetuating,

We can blame many and the Wall Street managers, in particular at the top are greedy, short-sighted crooks – however, the American public needs to see the light and take responsibility instead of pointing fingers like little children that ate too much candy. I am not saying that the system of corporate laws that we have do not nickel and dime the People, nor 8 years of Bush cronyism, nepotism and fiscal irresponsibility are not to contribute. But trying to point the finger at just one person, who was warning all of us, is meaningless. We only listened to what we wanted to hear.

[JScott]

Well it's typical behavior of this presidential admin. (even tho he's been under several of em of both parties but stil)-he's not the first of em-it's been consistently lying, denial and 'don't blame me for anything'. Lesee-Karl Rove, Colin Powell, Douglas Feith the list goes on and on......

[peterg76]

Greenspan worked for Wall Street. For the rest of us, he made things worse.

[outnow]

Greenspan said that he is right only 60% of the time. His Ponzi scheme allowed Bush the economic cover to conduct wars for oil, as Greenspan admitted, more or less. The Ponzi scheme went bust. Now it's time to assign blame. The subprime mess is systemic - affecting the entire global financial system. remember that we are now globalized so fraud on Wall Street causes globalized collapse, chaos, and misery.

The 500 trillion dollars in derivatives could have a 5% default. That's 25 trillion dollars right there! This will be the first truly global depression. It can create insolvent institutions all over the world. Mortgages were used to expand consumer spending. The risks were taken off the books of non-banks and bundled, thus poisoning the well. Few professionals understand this market. There is no regulation. The governments just let it go forward. The Mortgage-equity withdrawals were based on the assumption that real estate prices would go upwards forever.

25 trillion dollars in junk bonds and junk equity has poisoned the wells and the institutions themselves are not refinancing the debts. The world is not ready. There are food riots all over the place. Rice, wheat, corn. Warren Buffet bought food companies. Wonder why?

[larry278]

The UK's FINANCIAL TIMES has an editorial today, 4/9/08, which repeats some of the points in this blog, is headlined to lead a reader to think that he/she will see a defence of Alan Greenspan, covers points not discussed in this blog in FT jargon [aka financespeak, an arcane dialect of English], is more detailed than this blog & damns Mr Greenspan with faint praise. FT's writers are skilled at damning with faint praise as they catalog & analize[sp] a subject. That often happens when a writer or media outlet attempts to present a fair & balanced view of a subject. That probably is the main reason why writers hate critics.

[NelsonR]

Greenspan like Bernanke should take responsibility for MUCH of the blame. They were the experts yet many bloggers, including myself knew years ago that the economy was on a path of destruction.
They are suppose to be the professionals yet low interest rates were the normal course of business with Wall Street running fast and furious with corruption abounding, including CEOs gleaming multi million dollar benefits. Now you financial wizards deserve many more foreclosures to enhance the deficit spending the government has acquired a taste for. With many more foreclosures ahead, increased write downs by our glorious financial institutions less tax revenues for communities to support local and state institutions, what have you, an abysmal long term downturn for America. Our elite and upper crust are safe though invested in overseas currencies and investments, how nice.

[littlenoodles]

I heard Greenspan being interviewed as part of his book tour. The interviewer asked him whether he thought owning a house was a good investment for middle-class Americans, and his answer was pretty shocking.

He said something like, "in a Capitalist society, it's important for people to have a stake in the system".

Not that it's a good investment for them (it may actually be - he didn't answer that question), but that it's important for people to identify with the winners in a system that has winners and losers. Important to the winners, that is. It was almost like it 'just slipped out'. Much too honest for Greenspan's famous tortured responses to questions.

[WIpatriot]

Important to be sucked up INTO the system, and hooked for life. If you are not sitting at the desk with the controls, you are one of the losers.

[raygunnot]

The author conveniently left out the fact that Greenspan endorsed the 2001 tax cuts, which arguably led to huge deficits in the next few years. But the ultimate outrage is, the tax cuts were based on the use of the Social Security trust fund to finance the reduction of taxes on the wealthiest Americans. This is an era when the Baby Boom generation is at their peak of earnings, thus the trust fund is accumulating rapidly.

And whose idea was it, back in 1983, to use the SS trust fund to help finance the Boomers retirement, leading to higher payroll taxes? Why, whouda thunkit, it was Alan Greenspan. To my knowledge, Greenspan has not uttered one word in defense of the trust fund he created, creating the real possibility that the government will renege on the trust fund bonds, thus completing the biggest transfer of wealth from the middle class to the rich in history. Has anyone on this so-called tour even asked him the question? Actually, where is the tour going? The author left that out too.

[joebaggadonuts]

Henry,

I wonder why you bother writing for this audience. Especially about Greenspan. If he wan't part of the solution, and he had power and influence, he was part of the problem. He wasn't part of the solution and he had power and influence which he did not use to resolve the problem. Blaming Greenspan is correct. QED.

Get over it.

Thanks.

[WIpatriot]

He can't help himself, joe. It's just BURSTING to get out and on paper, so to speak.

Discuss amongst yourselves.

[oafishcad]

Our economy is in the economic mess it's in because of Republican fiscal policy. Greenspan is but one part of that. He was and is a partisan republican, and it was reflected in when and how he changed interest rates coinciding coincidentally with election cycles of 2000 and 2004. Republican fiscal policy does work in its intent, to take from the many and give to the financial aristocracy of the world. Screw America as long as them that's got still get.

[Dunnage]

Greenspan buying into the Bush tax cuts, even the wealthy knew this was a loser for them in long run, ended whatever credibilty he had. Reminds me of Powell's U.N. performance -- see these grainy pictures -- now visualize the end of the world as we know it.

[realpolitic]

Greeenspan is a follower of Ayn Rand's "survival of the fittest" philosophy. He has created a "survival of the fittest" economy. Greenspan could have firmly stated that we could not afford the Bush tax cuts for the wealthy. He did not trust government with surpluses and said little. Now sadly, we again face a mountain of debt, growing larger daily, with little maneuverability in the face of the social security crisis, except to cut benefits. Perhaps this result was the Republican goal all along.

[vfurman]

Perhaps? It could not have been anything else!!

[WIpatriot]

Perhaps?

Precisely.

[DRaymond]

Greenspan's power was substantial but his scope of authority was limited. Of course those who did have the authority to rein in the abuses (congress and the rest of the administration) are going to blame him because it distracts from their own culpability.

However if we allow Greenspan to take the hit then we CONTINUE to let those who really have the authority to prevent future occurences of this to take the contributions of Big Finance to skirt their responsibilities.

[JacobSinger]

Strip away the hyperboyle and this article's true nature is revealed:

Henry Blodget = Greenspan apologist.

[DanBest]

Greenspan has endorsed McCain as the presidential candidate. Seems obvious to me that the guy is out of touch and has been for most of his tenure. To me he is just the lead con-man in a game that all of us will pay for whether we wanted to play or not.

A question: How could one of the most powerfule people in America be the guy who heads a quasi- government agency which is really a private bank that prints our money and spends our tax dollars when we have no say in its actions? Does that sound like a democracy to you?