Greenapan's book launch and PR tour could not come at a more interesting time. Maybe he can still get the book title changed to "Mr Bubble" since he helped create so many of them. Better still, Greenspan can team up with Bush and they can both explain how great they really are despite what everyone can see with their own eyes. Excerpts from his 60 Minutes interview here.
"With hindsight, it is possible to see that his modus operandi was to blow one bubble after another," said Tom Schlesinger, the executive director of the Virginia-based Financial Markets Center, which analyses the Fed. "Mr Greenspan consistently argued that central banks have no legitimacy to intervene to prevent asset price bubbles, and to substitute their judgement for that of millions of market participants. But central banks have no problem whatsoever intervening when they think that product prices are inflating, or when labour markets are overheating."
Aggressive moves to cut interest rates in 1987 were credited with preventing the stock market crash from affecting the rest of the US economy, which kept on growing, but a similar move to restore confidence after the collapse of the hedge fund Long-Term Capital Management in 1998 has been blamed for having the side effect of inflating the dot.com bubble, which burst in 2000.
