Mark Felsenthal

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Greenspan slammed

March 11, 2009

Former Fed Chairman Alan Greenspan isn’t getting the respect he used to.

Greenspan’s op-ed in the Wall Street Journal drew withering criticism from High Frequency Economics’ Ian Shepherdson, who was unimpressed with the Maestro’s denial of any Fed contribution to the country’ worst financial crisis since the Great Depression.

Greenspan: “Given the decoupling of monetary policy from long-term mortgage rates, accelerating the path of monetary tightening that the Fed pursued in 2004-2005 could not have ‘prevented’ the housing bubble.”

Shepherdson: “We were appalled and outraged by Alan Greenspan’s self-serving it-wasn’t-my-fault op-ed… If Mr. Greenspan can say with a straight face that this was not a consequence of the Fed’s excessively easy stance then either he is delusional or a very talented poker player.”

Greenspan said his preferred appraisal of the Fed’s track record during his tenure as chief of the U.S. monetary policy temple is Milton Friedman’s: “‘There is no other period of comparable length in which the Federal Reserve system has performed so well. It is more than a difference of degree; it approaches a difference of kind.'”

Shepherdson, a Briton who was chief economist for HSBC Securities in New York before joining High Frequency Economics, had a different assessment:

“Greenspan ought to have used the pages of the Journal to apologize to the nation. Instead, his piece will stand as a testament to his hubris, or perhaps his delusions. History will not be kind to him.”

 REUTERS/Kevin Lamarque  (Greenspan testifies before the House Oversight committee in October)