Greenspan supported tax cuts back in 2001 (01/25/2001 from CNN Money). Greenspan again defended his position on tax cut in 2005 (‘01 Tax Cuts Were Justified, Greenspan Maintains, 3/16/2005 from Washington Post). Now Greenspan is criticizing Bush’s tax cut that he supported (9/14/2007 from Bloomberg). And he says he is mis-interpreted?? Hey, Greenspan, if you are mis-interpreted, you have let it go for 6 years. And I thought you really like to speak up and express your opinions?
Greenspan says ARMS might be better deal (2/23/2004 from USA Today). This is just right before the first interest rate increase in June 2004. What does that mean that ARMs might be a better deal? Is that an encouragement for would-be homeowners to take up the extremely low initial teaser rate at 1%, with the potential of resetting to 5% later? And you said that you don’t get how subprime mortgages were rampant until late 2005/2006. I wonder who specifically taught the homeowners about all the benefits of ARM.
On the housing bubble, Greenspan defends himself in an interview:
Greenspan argues that the Fed mainly has influence over short-term interest rates, which affect adjustable-rate mortgages, a small portion of the overall mortgage market. Long-term interest rates, which influence fixed mortgage pricing, are somewhat beyond the Fed’s control and became more so earlier this decade.
“We tried to push them up in 2004, and we failed,” he says. “What we found was that the global forces of disinflation were far too powerful for even the Federal Reserve. We tried again in 2005, and we failed.”
Greenspan notes that if the housing bubble was the Federal Reserve’s fault, why were similar such bubbles — many of them worse than what was seen in the USA — created around the globe?
Sorry, Greenspan, I don’t buy that at all. If you want to say that globally there were also other housing bubbles, and so, it was not your fault, then you should refrain from taking all the credits for the low inflation due to the low manufacturing wages from globalization. It’s simply your job of watching over US economy, whether there are globalization factors or not. With increasing globalization, inflation in the USA is spilling over to many countries, especially in countries where there is a currency peg or link to US dollar. Greenspan/Clinton simply got lucky to take the ride in the best part of globalization.
Mis h has an excellent review on Greenspan’s words (click to read more). Greenspan’s lies are obvious to those who remember.
