GREENSPAN IN TROUBLE FOR DOUBLE BUBBLES
Wall Street can thank Alan Greenspan for the latest turmoil in the credit markets.
That’s the conclusion of Portfolio magazine Contributing Editor John Cassidy, the latest critic to blast the former Federal Reserve chairman’s policy decisions.
“By keeping interest rates too low for too long, he encouraged a borrowing-fueled speculative binge, which has now given way to a credit squeeze,” Cassidy writes in the coming issue of Portfolio, which hits newsstands next week.
“By failing to crack down on the mortgage industry, he allowed subprime hucksters to peddle dubious loans, which the financial industry’s math whizzes packaged for investors.”
Based on his experience during the dot-com boom and bust, Greenspan should have known that “the best way to control a speculative boom is to prevent it from developing in the first place,” Cassidy adds.
“For a Fed chairman to have one speculative bubble inflate during his tenure is an indictment; to have two of them qualifies him as a serial bubble blower.”
The disparaging article comes as Greenspan’s eagerly anticipated memoir, “The Age of Turbulence,” is being released. Greenspan is also scheduled to make an appearance Sunday on CBS’ “60 Minutes”
Cassidy finds Greenspan, who has long been one of the economy’s biggest boosters, “remarkably pessimistic about the prospects facing the United States” in the book.
Besides being concerned about the retirement of the baby boomers, Greenspan is worried that technological innovation is slowing down.