Monday, April 14, 2008

A postmortem on "Greenspan Week"

Source: The Mess That Greenspan Made blog

'So, did last week's spring offensive by former Federal Reserve Chairman Alan Greenspan do any good?

From my (obviously biased) viewpoint, it only seemed to make things worse - his response to his critics only seemed to make the critics speak louder while attracting a whole new group of doubters as to the long-term deleterious effects of the Greenspan term at the Fed..."

"...Ms. Schwartz says the Federal Reserve caused the credit crisis that has shaken financial institutions around the world.

She says this market mayhem need not have happened – and specifically blames former Fed chairman Alan Greenspan for it. Mr. Greenspan, she says, took interest rates too low – reducing the Fed discount rate to 1 per cent – and then kept them there for too long.

“It is clear that monetary policy was too accommodative,” she told The Sunday Telegraph earlier this year in a report that described her as defiantly lucid. “It was bound to encourage all kinds of risky behaviour.”

“They [the Fed] need to speak frankly to the market and acknowledge how bad the problems are, acknowledge their own failures in letting this happen. This can't be blamed on global events. 
There would never have been a subprime mortgage crisis if the Fed had been alert.The Fed failed to confront something that was evident. This is something Alan Greenspan must answer for...'

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