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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerLast week I ranted that Greenspan was at fault for leading us into the mortgage mess and I was honored to see today that I'm not alone. Nobel prize winning economist Joseph Stiglitz told Bloomberg that the U.S. economy risks tumbling into a recession because of the subprime crisis and a "mess" left by former Federal Reserve Chairman Alan Greenspan. Bloomberg quotes him in its story: "I'm very pessimistic. It's not just the housing sector. Over the last five to six years our economy has been bolstered by the real estate sector."
Stiglitz discusses how Americans have withdrawn billions from home equity to keep the economy moving. He goes on to explain why he blames Greenspan: "Alan Greenspan made a mess of all this. He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems. He encouraged people to take out variable rate mortgages. That helped to create the subprime crisis."
I think it's time for Greenspan to quietly fade away and stop making statements around the world that cuts into what current Federal Reserve Chairman Ben Bernanke is trying to do to fix his mess.
Lita Epstein has written more than 20 books including the "Complete Idiot's Guide to the Federal Reserve."
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Reader Comments (Page 1 of 1)
11-17-2007 @ 6:43PM
will257b said...
I am sure there will plenty of blame to go around and Greenspan is certainly a high profile candidate. I don't blame Alan. I do recall that he told Congress we have "irrational exuberance" in the economy. At the time he was chairman of the Fed, a pseudo-government entity, with little power to enact law. It is empowered to control money flow, but not to tell the financial institutions how to conduct daily matters. In short, he did not have to power to stop their actions - Congress did. He hinted and they did not look and, by his own admission, he did not think that the situation would get this bad. So, the august body and the top money man missed stopping the present situation.
If I wanted to blame someone, Barney Franks would be higher on my list.