Greenspan shrugged off
Welcome to the Counterparties email. The sign-up page is here, itâ€™s just a matter of checking a box if youâ€™re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.
Bloombergâ€™s Daniel Akst calls the book infuriating, writing that the â€śplodding text oscillates maddeningly between equivocation and chutzpahâ€ť. Akst slams Greenspan for calling the financial crisis â€śalmost universally unanticipatedâ€ť, despite what Akst says were â€śa host of indicators that were pointing to troubleâ€ť. Akst is frustrated that despite the bookâ€™s subtitle (â€śRisk, Human Nature, and the Future of Forecastingâ€ť), and the authorâ€™s self-professed expertise in economic forecasting, how Greenspan could have not seen danger ahead is barely explored. Furthermore, Greenspanâ€™s claimed concern for federal deficits is undercut, Akst writes, by his endorsement of both of President Bushâ€™s rounds of tax cuts.
The WaPoâ€™s Steven Pearlstein says Greenspanâ€™s effort at introspection simply yields a reiteration of his prior â€śunshakable faith in free markets, an antipathy toward market regulation, and a conviction that progressive taxes and social spending are to blame for slow growth, stagnant wages and exploding deficitsâ€ť.
Paul Krugman expands the criticism, pointing to â€śGreenspanâ€™s amazing track record since leaving office â€” a record of being wrong about everything, and learning nothing therefromâ€ť. Greenspanâ€™s refusal to accept responsibility for his misjudgment makes him, in Krugmanâ€™s view, not just a â€śbad economist… heâ€™s being a bad personâ€ť.
In office, Greenspan saw no credit risk in Fannie or Freddie, and made no indication that a housing bubble, undercapitalized banking system, or securitized assets posed any risk whatsoever to the US economy. Since leaving office, Greenspan predicted in 2010 that US would quickly become the next Greece. He has also argued in favor of austerity, both in the US and UK, despite the fact that austerity killed Europeâ€™s nascent recovery, and pushed up the US unemployment rate while dragging down growth.
Larry Summers is disappointed that Greenspan hasn’t changed his anti-Keynesian views, but lavishes (projects?) praise on the intellect of a man he had the “privilege to work closely with”. Summers writes that “Greenspanâ€™s range, vision and boldness is especially important at a time like the present, when Washington is preoccupied with the political and petty”.
The NYTâ€™s Binyamin Appelbaum thinks Greenspan has found a kernel of an interesting idea when he discusses the economic consequences of human irrationality. But Appelbaum laments that Greenspan dwells on this topic for just a single chapter and instead spends most of the book retreading old, largely discredited ideas like tax cuts to spur business investment. — Ben Walsh
On to todayâ€™s links: