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.
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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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......
Greenspan worked for Wall Street. For the rest of us, he made things worse.
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?
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.
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.
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.
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.
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.
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.
He can't help himself, joe. It's just BURSTING to get out and on paper, so to speak.
Discuss amongst yourselves.
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.
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.
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.
Perhaps? It could not have been anything else!!
Perhaps?
Precisely.
Republicans want to turn back the clock on all the New Deal programs.
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.
Strip away the hyperboyle and this article's true nature is revealed:
Henry Blodget = Greenspan apologist.
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?
He deserves an h of a lot more criticism than he'll ever get in the mainstream.
Read the article from this weekend's Wall Street Journal and you will see how far off the old guard is on the new economy. It is frightening how tired and lost people like Soros, Buffet and Greenspan have become. Read my book--JUMP POINT: How Network Culture is Revolutionizing Business and you will understand that this is a generational economic shift. http://blog.pff.org/archives/global_innovati/
OOOOO, do I get a discount if I buy now, and mention this Post???
Yeah, he is to blame big time. He was sold to us as having the smartness of Einstein, regarding economics, by the likes of you; while he was playing the role of the "poker-faced" player advocating deregulation; and free-market economics. He was so puffed that William Jefferson Clinton was afraid of replacing him because the perception had been created, that everything would fall apart if someone else took the helms that he
held by sleight-of-hand. He encouraged the mortgage mess; and aided and abetted the wrong headed economics of the present administration. He may cry "don"t blame me"; but all he needs to do is to look in the mirror. He, like many others, takes advantage of people's ignorance, to thrive in the land of make-believe, which we have become. It is a book tour; not a "don't blame me tour". I will buy his worthless book when it is sold on the $1.00 dollar rack. Enough said.
Got the book as a gift from daughter-in-law for fixing her car, and told her I could use a few good laughs. I was not disappointed. Practically wore out a highlighter, though.
And what was Greenspan's position on gutting the controls and regulations put in place after the Great Depression and which led to the unparalled economic expansion AND INDIVIDUAL prosperity after WW II?
Free Market's work great in theory but never seem to pan out in the real world. Something Mr. Greenspan ought to know.
That theory requires a world of infinite space and easily-obtained resources, perfect isolation from enemies, and a tribe-sized economy with a prehistoric level of technology so that all parties have full knowledge and equal influence over each other.
Hence the corporatists' obsession with the oldest possible traditions and "original intent" of the Constitution. They need to keep government as far in the past as they can get it, to keep it as clueless as possible about the risks and side effects of cutting edge business.
I agree. Markets are always controlled. Or attempted to be controlled. Free competition drives down prices. Profits shrink-companies go belly up. Capitalism works great as long as it is regulated. The only commodity that is mostly free is labor. When will we ever learn the lessons of the Great Depression? Lets face it human greed knows no bounds.
I couldn't understand it. It sounded to me a lot like heading for a depression. In the Depression the interest rate was 1% but nobody could afford it. He also referred to the housing market as becoming a litle "frothy" which seemed to me an understatement. Without laws and regulations it was easy for banks to suck in people. Some of the contracts were beyond a lawyer. But it was easy money for the banks.
"Frothy" is one of those technical economist words, maddog, meaning whatever you want to infer from it...LOL.
Mr. Blodgett,
It is only hindsight for people like you and Greenspan, who did not see what his policies would lead to.
For those of us who did, it was something avoidable.
The issue is not whether Greenspan made mistakes in a difficult job. We all allow that people in positions of responsibility are human and will make mistakes. The issue is his motivation for making the decisions he did. Was he a dedicated financial tactician working for the good of all or was he a politican partisan using his power for the benefit of one segment of the political universe?
Many observers have commented that while his earlier years were exemplary in his later years he seemed to take on the role of republican apologist (remember when he testified that the tax cuts were a good monetary idea?) and tip the scales toward the benefit of conservative administrations. The bubbles can be seen as a way to paper over the disaterous effects of neo-conservative economic policy with an extreme easy money position that saved the current admisitration in the short run but which exacerbated the problem and pushed it forward in time to be solved by his predecessors.
Everyone saw the bubbles forming but allowed that this was a justifiable thing to do to prevent the specter of deflation. But bubbles create crashes and easy money solutions create inflation and if current trends continue the new inflation will impoverish the baby boomers just as they get to the age of needing social security. I guess that's one solution to the problem but not one that Greenspand can claim he does not have to take political responsibility for.
I'm glad someone brought up Greenspan blessing the Bush tax cuts. They are one more nail on the coffin of our economy.
And not only did Greenspan help with this economic mess by saying ARMs were great for the mortgage companies as more people could benefit by being able to purchase homes (more tidbits for the masses), but his wife, Andrea Mitchell was also on HRCs Bosnia "sniper fired" trip and do you think she would have said on the MSM that the trip was not as described by HRC. Hell no! Sinbad had to give us that while Mitchell sat there in silence. I have no respect for either Greenspan or Mitchell as they have contributed to these fallacies and most definitely deserve one another. But our country does NOT deserve the likes of them!!! I am so ANGRY over all this crap. It has been horrible for millions of Americans and we have been duped by the very people who were supposed to be honest with us. Apparently honesty does not exist in the very wealthy segment of our society.
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Posted April 8, 2008 | 09:22 AM (EST)