For all of his appearance as a wizened financial monk, Alan Greenspan was not as capable as he appeared to be. Prof. Brad De Long offers a mild review of the new Greenspan book, and is probably correct in labeling it as ghostwritten.
THE release of Alan Greenspan’s ghostwritten memoirs, The Age of Turbulence, has elicited charges that he was not such a great central banker after all.
The indictment contains four counts: that he wrongly cheered the growth of nonstandard adjustable-rate mortgages, which fueled the housing bubble; that he wrongly endorsed Bush’s tax cuts; that he should have reined in the stock market bubble of the 1990s; and that he should have done the same with the real estate bubble of the 2000s.
De Long goes on to separate them into felonies and misdemeanors.
Greenspan also pleads guilty to misunderstanding the character of the Bush administration. He thought that his old reality-based friends from the Ford administration were back in power. He thought that he — and Treasury Secretary Paul O’Neill — could win the quiet “inside game” for sensible policy without resorting to an “outside game” that would make his reappointment in 2004 unlikely. He was wrong.
But how serious are these policy-political crimes to which Greenspan now pleads guilty? In my view, they are misdemeanours. Against them you have to set what former treasury secretary Larry Summers calls Greenspan’s “golden glove” performance at avoiding and minimising recessions during his years at the Fed.
The “felonies” of which Greenspan stands accused are the other two charges. Here, Greenspan holds his ground, and pleads not guilty.
I’m not an economist, and I don’t play one on a college campus, but I think there is a body, the American economy, so there had better be some damn felony convictions for economic homicide. The national debt has doubled in just eight years, thanks in part to Greenspan’s policies and his unwillingness to speak the clear truth about the Bush Administration. By the time Bush leaves office, the largest sink of government revenue will be the service of debt, much of it to foreign banks holding US Treasury notes.
De Long wraps up with:
All in all, Greenspan served the US and the world well through his stewardship of monetary policy, especially by what he did not do: trying to stop stock and housing speculation by halting the economy in its tracks.
What the hell are you talking about, Professor? That is equivalent to lauding a politician for not trying to solve an unemployment problem by killing the unemployed. Greenspan was yet another Republican hack who liked the perks of his job and was unwilling to risk them to tell the truth.
(My apologies to T. Monk, whose music makes each day brighter.)