Do you remember those days when every utterance of Alan Greenspan was eagerly anticipated, carefully parsed and highly influential?
He does. And the growing sense that the Guru made some mistakes is only increasing his desire to talk. (See Monday's NYT on his indifference to warnings on the subprime crisis.)
These…
Do you remember those days when every utterance of Alan Greenspan was eagerly anticipated, carefully parsed and highly influential?
He does. And the growing sense that the Guru made some mistakes is only increasing his desire to talk. (See
Monday's NYT on his indifference to warnings on the subprime crisis.)
These days, he's got his book, he's courting press coverage and he's doing sit-down interviews on TV. (
Bonus question: Do you remember Jon Stewart? The Guru sat with him before darkness set in.)
In his most recent interview (
on ABC's "This Week"), he tilted to the left of the mainstream debate on how to fix the mortgage mess, advocating some kind of government-funded bailout (er,
assistance) to troubled borrowers. As the
NYT summarized the Guru's remarks:
“It’s important to recognize that there are a very large number of people who are in very major stress and having great difficulty in paying off their mortgages,” Mr. Greenspan said. “Cash is available,” he added, “and we should use that in larger amounts, as necessary, to solve the problems of the stress of this....”
Mr. Greenspan said, “It’s far less damaging to the economy to create a short-term fiscal problem, which we would, than to try to fix the prices of homes or interest rates.”Either of those efforts, Mr. Greenspan said, would “drag this process out indefinitely.” [all emphasis added]
Just to be clear, in the boldface phrases above, the Guru is talking about
government money.
ABC News offers this additional quote:
"It's very critical that this thing reach a selling climax -- if I may put it in other words, exhaust itself," Greenspan said. "It's only when the markets are perceived to have exhausted themselves on the downside that they turn. Trying to prevent them from going down just merely prolongs the agony."
Obviously the Guru recognizes that there is some kind of housing bubble
and that this bubble is in a correction phase, as we speak.
Somehow, he is staking out a position that
the bubble should be allowed to pop, with all the damage that implies, even as he is suggesting government assistance to homeowners affected by the pop.
Make no mistake, Greenspan is telling us that lots of proposals for dealing with the bubble amount to efforts to
prevent home price declines. He finds those efforts foolish in the sense that they "prolong[] the agony" – a nod to recent historical lessons from Japan.
This is hardly the same Guru we knew. And we obviously don't live in the boom times he's associated with. What's his word worth these days?
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