Yet, it isn't too hard to find ways
that Alan Greenspan helped create the very bubble that he
now says was simply caused by something in the atmosphere.
Back in 2004, Alan Greenspan helped
start the housing bubble. Here's a
post I
wrote in March of 2004 about the extremely unstable ground
upon which the Bush economy was being built.
Yet, putting aside the anemic
job growth record right now, the economy is growing
increasingly unstable and liable to a collapse that
could rival the savings and loan bailout in papa Bush's
term. The problem is the amount of personal debt
Americans hold, especially in their homes and how much
that debt is based on adjustable-rate mortgages.
Greenspan
testified
before Congress a few
weeks ago saying that consumer debt wasn't too big of a
concern because so many people had gotten to refinance
or buy their home with these low rates. Yet, as Atrios
pointed out,
Fed Chief Greenspan is speaking
with a forked tongue because he's
urging
people to go for adjustable-rate
mortgages even while he worries about the financial
stability of the Fanny Mae and Freddie Mac. He acts like
the low interest rates are here to stay. Meanwhile,
others in the Federal Reserve are calling to
increase
the rates. Seeing how Greenspan is
suggesting that we need to
default
on the Social Security trust fund,
I worry that he is just setting up the "lucky duckies"
for another massive ripoff.
Let's look at the
prediction
from Bill Fleckinstein from MSN money
in March 2004:
So the most irresponsible
central banker in the history of the world created the
biggest bubble in the history of the world, which had
disastrous consequences for the stock market and the
economy. In order to ameliorate that, he has created
bubble-like conditions and absurd financing schemes in
real estate. Meanwhile, we've seen an enormous
concentration of risk develop inside the financial
system: We are down to just a handful of big banks and
government-sponsored entities that are using his other
favorite toy, derivatives, to theoretically manage away
all their risks.
Nice, huh?
Saturday, NPR's website featured
another story
about the FED deciding to
issue some new regulations that would stop "abusive lending
practices." Precisely the same practices that were sponsored
and allowed to fester under Alan Greenspan.
Paul Krugman recently
featured
the comments from an influential
French economist who described Alan Greenspan as an arsonist
who starts a fire and then rides onto the scene to be the
rescuing firefighter.
When you look at the
horrific mess
we are facing on the economic front,
we should all be cursing Alan Greenspan's name and hold him
accountable for putting us into this mess. Greenspan should
be known as the man who destroyed the lives of some
10s of millions
of Americans. That is his
legacy.
