Absolutely spot on. Here are a few highlights from an interview with Patrick Artus, chief economist of Natixis in France. Maybe people in the US are too close to the situation or don't want to admit that we allowed such a bad choice to stay in power for so long. Either way, the Greenspan-love defies all logic and few people except perhaps Hillary, ever bothered to call him out.
Artus: Greenspan was an arsonist and a fireman combined. He derived all his glory from his reaction to the savings-and- loans crisis, to the collapse of Long-Term Capital Management LP, and to Sept. 11, 2001. But LTCM and the savings-and-loans crisis were his doing. He absolutely failed to see where the malfunctions in the U.S. economy were.
Greenspan came up with a phrase, ``irrational exuberance,'' in 1997, but he didn't do anything about it.
Nayeri: How would you sum up his track record, then?
Artus: He was a very bad Federal Reserve chairman. He created four major crises: savings and loans, LTCM, new-technology shares, and subprime mortgages.
Nayeri: But surely you will acknowledge that Greenspan saved the planet at crucial turning points?
Artus: Yes, but after the fact. He's congratulated for his role as fireman, but he's the one who started the fire.
He had no vision of what was dangerous. Today, we're destroying the world banking system with this subprime crisis. Outstanding subprime loans add up to $1.2 trillion. That's the equivalent of Italy's gross domestic product.
Nayeri: But the world has enjoyed economic prosperity in the meantime.
Artus: The problem is that you pay for it later.
You can always manufacture growth by having extremely low rates and producing asset-price bubbles. But that's not a way to generate growth. You can't do that in the long run.
