Alan Greenspan explains that the subprime mortgage baffled him, Congress wanted an increase in home ownership, and anyway, it was either an economic bust then or a bust later. Yes, he could sound even lamer, but not much. Who knew the omniscient Fed Chairman had so little insight or clout into topics such as bank lending policies?
While Mr. Greenspan acknowledges that he could have done something to avert the housing crisis, he contends his hands were tied.
“If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?” Mr. Greenspan said. “When it looked as though we were dealing with a major increase in home ownership, which is of unquestioned value to this society — would we have been able to do that? I doubt it.”
Mr. Greenspan said that if he had taken steps to prevent the crisis, the outcome would have been painful.
“We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said. “And I will guarantee we would not have had a housing boom, a stock market boom or indeed a particularly good economy either.”
Oh, yeah - he reminds us that the rating agencies screwed up, too.
Well, he may be a good man, but he wasn't a very good wizard.
“If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?”
or with Andrea
Posted by: StrawmanCometh | February 12, 2009 at 12:18 PM
I think he must have gotten a lot dumber once he got married......
Posted by: matt | February 12, 2009 at 12:28 PM
I think he must have gotten a lot dumber once he got married......
Posted by: matt | February 12, 2009 at 12:28 PM
Will someone point out that raising interest rates, consecutively, 18 times would have that effect he was talking about.
Posted by: narciso | February 12, 2009 at 12:35 PM
Is he completely missing the point that if he had done something the effects would not have been as bad as doing nothing. It's like he ran from the squirrel a few years ago, to be devoured by the wolf today. I hope historians skewer him.
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Posted by: kim | February 12, 2009 at 12:36 PM
I think he got a lot dumber just before he got married.
Posted by: MayBee | February 12, 2009 at 12:38 PM
Don't blame Greenspan, he was mesmerized by Andrea's beauty. Aren't we all?
Posted by: bad | February 12, 2009 at 12:44 PM
The more I think about his comment the angrier I get. So he didn't have to deal with a little problem, now we have to deal with this big problem?
It's insulting that he'd tell us that, and discrediting to himself. Maybe he's losing it.
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Posted by: kim | February 12, 2009 at 12:58 PM
We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,
Thank goodness we dodged that bullet.
If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?
Obviously the idiots now screaming for more regulation would have screamed had there been more regulation. They are idiots. Is there no one in DC who understands economics and will endure (gasp) bad press in the course of pursuing policies that benefit the country?
Posted by: bgates | February 12, 2009 at 12:58 PM
Have you read his book, "I Married a Troll?"
Posted by: Mark O | February 12, 2009 at 12:58 PM
As I recall, he also suggested that people take adjustable mortgages, just before rates went up. Financial genius, Crazy Al.
Posted by: LindaK | February 12, 2009 at 01:17 PM
"Do you think that would have gone over very well with Congress?". Correct me if I'm mistaken, but isn't his position designed to be independent of Congressional influence. Is he admitting to dereliction of duty?
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Posted by: kim | February 12, 2009 at 01:27 PM
OK, if you hear a loud noise, it's me going off.
Greenspan admits to dodging a little bullet, thanks bgates, in order to set us up for the cannonball. And then admits to being afraid of Democrats in Congress.
Can we impeach him?
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Posted by: kim | February 12, 2009 at 01:29 PM
Greenspan should have behaved as a technocrat, but instead he chose to be a politician like most economists nowadays.
Posted by: Alan | February 12, 2009 at 01:29 PM
It must be terrible to get old and realize you're a coward.
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Posted by: kim | February 12, 2009 at 01:33 PM
Worse, that your cowardice helped wreck a whole civilization.
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Posted by: kim | February 12, 2009 at 01:40 PM
It must be terrible to get old and realize you're a coward.
That probably pales in comparison to being old and realize you are married to Andrea.
D'ya s'pose he prays for for senility to advance quicker?
Posted by: bad | February 12, 2009 at 01:52 PM
Maybe he's drowning his troubles from the same medicine bottle Andrea excuses her moments of candor from.
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Posted by: kim | February 12, 2009 at 02:07 PM
Considering he once dated BABA WAWA, Andrea Mitchell must seem like a step up. Doddering old fool. What havoc Viagra wreaks.
Posted by: peter | February 12, 2009 at 02:17 PM
Another way to read this is that he is none-too-subtly pointing the finger at Barney Frank and Chris Dodd. Anything he could have done at the Fed would have been undone by Congress.
Narciso, you are right--the rate increases were a blunt instrument to clamp down, like blowing up the house to kill the flies.
Posted by: jimmyk | February 12, 2009 at 02:39 PM
"Narciso, you are right--the rate increases were a blunt instrument to clamp down, like blowing up the house to kill the flies"
Any other topics you are completely ignorant about that you'd like to offer your thoughts on ?
Posted by: Kilo | February 12, 2009 at 03:08 PM
Ah, does Kilo understand it all? Enlighten us, please. Better yet, get ye to the Fed. Your indispensability is critical for our nation's future.
Now that I've snarked, I'm not sure what the two meant either. I asked earlier if the rate increases from 2004-2006 were just Mr. Mitchell behind the 8-Ball.
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Posted by: kim | February 12, 2009 at 03:28 PM
And I like jk's suggestion that Mr. Mitchell may be pointing at the true culprits.
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Posted by: kim | February 12, 2009 at 03:31 PM
I'm sorry to be so cynical, about the author of "Turbulence in the Eye of the Storm" (check with Amazon, for the correct title)but not signaling that Dodd, Frank,
& Waters,among others, were direct beneficiaries of the forces, distorting the economy, really was a waste of time. Actually, considering that the engineer of the 20s boom and bust, George Strong, was
safely dead by '29, he looks better than Greenspan does today. And hindsight isn't 20/20 either ,because a similar gas price
and interest hike in 1999-2001, helped pop the previous bubble, and brought to power
the pale copy of the Obamas, the Kirshner, after helping to discredit the free market
bonafides of the likes of Menem.
Posted by: narciso | February 12, 2009 at 03:45 PM
SO Greenspan actually did know his Hayekian economics after all: correct the mistakes of the Fed right now at a small price -- or correct them later at a much bigger price.
Greenspan chose to do what was good for Greenspan at the time -- kick the can and have good times while he was in charge -- making things far worse for all of us after he was out of office.
Way to go Greenie.
Posted by: Greg Ransom | February 12, 2009 at 03:57 PM
Yeah Greg. Andrea threatened to keep having her way with him unless he did her bidding.
Posted by: bad | February 12, 2009 at 04:06 PM
Judd Gregg is withdrawing his nomination from Commerce.
Posted by: glasater | February 12, 2009 at 04:17 PM
Any other topics you are completely ignorant about that you'd like to offer your thoughts on ?
I suspect I know a bit more about this stuff than mr. kilo, who sounds like he may have had a kilo or two too many.
Yes, in theory the Fed is supposed to be independent, but this "independence" is always at the mercy of our beloved Congress. As a consequence, every branch of the Fed has, for example, a "Community Affairs" department that, among other things, helps implement the Community Reinvestment Act, and which pays no attention to the economists trying to explain why it's a bad idea.
I think Greenspan was somewhat cowardly, but he did speak out about FM/FM, and a lot of good it did.
As for the rate increases, I'm not sure what the misunderstanding is. They left rates too low for too long, and kept increasing them because they were concerned about inflation. As happens again and again, by the time they realized that the economy was imploding, it was too late.
Posted by: jimmyk | February 12, 2009 at 04:28 PM
You thought the man who married Andrea Mitchell was smart?
Posted by: clarice | February 12, 2009 at 04:43 PM
Nice to know that Greenspan is now telling Americans that he did not have the spine to do what was right. He wanted everyone to keep believing he was the indispensable Mr. Economy. What an idiot.
Posted by: Analien | February 12, 2009 at 09:52 PM
"Dumb" and "Dumber". Alan/Andrea; pick 'em.
It constantly amazes me that Andrea is still on the air. Even before her role in the Libby affair, she was just so ignorant/clueless (pick 'em). Apparently credibility has low value among some news organizations.
Posted by: flodigarry | February 12, 2009 at 10:20 PM
I don't understand his claim that there was no middle ground. It was either a bubble or 10% unemployment? Interest rates were really low for what 4-5 years after 9/11? Even as the prices of gasoline and food went through the roof he was reluctant to increase the rates.
Posted by: jt007 | February 13, 2009 at 02:47 PM
It looks as if 9/11 has been forgotten.
Posted by: Thomas Esmond Knox | February 13, 2009 at 10:25 PM