Alan Greenspan fights back against critics - Feb. 5, 2010
"Standing just behind the tumult of today's controversy is the matter of his legacy. What is the consensus view of him likely to be, say, 40 years from now? The best answer comes from Allan Meltzer of Carnegie Mellon University. The 1,300-page second volume of his history of the Fed has just been published (the 800-page first volume appeared in 2003).
His take: "Greenspan will be remembered for maintaining a long period of low inflation and stable growth punctuated by short recessions and followed by the error of believing that deflation was a problem. That caused him to keep policy too easy too long. But he did not force bankers to buy subprime. That was their decision, encouraged by a mistaken government housing policy that he testified against and the 'too big to fail' doctrine that he did not try to end. So if truth prevails, the deep crisis will be blamed on housing policy, 'too big to fail,' and the mistake by [Hank] Paulson, [Tim] Geithner, and Bernanke of letting Lehman fail without much warning after 30 years of bailing out large failures."
As an assessment, that isn't the king-of-the-world adulation Greenspan was getting four years ago, but it's not bad. It fits with his own often-quoted view that as Fed chairman, "I was praised for things I didn't do, and I'm now being blamed for things I didn't do.""
"Standing just behind the tumult of today's controversy is the matter of his legacy. What is the consensus view of him likely to be, say, 40 years from now? The best answer comes from Allan Meltzer of Carnegie Mellon University. The 1,300-page second volume of his history of the Fed has just been published (the 800-page first volume appeared in 2003).
His take: "Greenspan will be remembered for maintaining a long period of low inflation and stable growth punctuated by short recessions and followed by the error of believing that deflation was a problem. That caused him to keep policy too easy too long. But he did not force bankers to buy subprime. That was their decision, encouraged by a mistaken government housing policy that he testified against and the 'too big to fail' doctrine that he did not try to end. So if truth prevails, the deep crisis will be blamed on housing policy, 'too big to fail,' and the mistake by [Hank] Paulson, [Tim] Geithner, and Bernanke of letting Lehman fail without much warning after 30 years of bailing out large failures."
As an assessment, that isn't the king-of-the-world adulation Greenspan was getting four years ago, but it's not bad. It fits with his own often-quoted view that as Fed chairman, "I was praised for things I didn't do, and I'm now being blamed for things I didn't do.""
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