Word: greenspans
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Everywhere you turn these days, there's cause for panic. The news is filled with talk of a global credit crisis. American homeowners are defaulting on their loans and housing-related stocks have crashed. The dollar is doing a disappearing act. Alan Greenspan, after years of artful obfuscation, has suddenly discovered a terrifying gift for clarity, warning that inflation will rise and house prices will tumble. Stock market volatility has surged. And now, feeding fears that the contagion is spreading, the British bank Northern Rock has suffered a near-death experience...
...been out of office for more than a year and a half now--and has spent, by his own account, a notable amount of that time in the bathtub. Yet many Americans still want to believe that Alan Greenspan is in charge of the economy...
...olden times, mainly the late 1990s, faith in Greenspan's omnipotence was expressed almost exclusively in positive terms. He was the "maestro," as Bob Woodward dubbed him in a best-selling book; the senior member of the "Committee to Save the World," as this magazine put it in a 1999 cover story; the Federal Reserve chairman who didn't just preside over the longest economic expansion in U.S. history but also was credited with somehow willing it to happen...
Since that long boom ended in 2001, though, griping and whining have been ascendant. Greenspan was a bubble blower, the main criticism goes, a man whose lax monetary policies encouraged excess and speculation. What's more, he failed to thwart George W. Bush's demolition of the budget surpluses built up in the Clinton years. These complaints were steadily gaining in volume, thanks to the collapse of a mortgage-lending boom that began on Greenspan's watch, when the man jumped into the fray in mid-September with The Age of Turbulence, a new book about his life...
THAT A REAL ESTATE BUST MIGHT LAND US IN a recession is in a way fitting because it was a real estate boom that kept the last recession, in 2001, so brief and shallow. Trying to stave off deflation in the wake of the stock-market crash, Alan Greenspan's Federal Reserve cut the short-term interest rates that determine what homeowners pay on adjustable-rate mortgages. Meanwhile, investors desperate for someplace other than the stock market to put their money piled into mortgage securities, driving down the cost of fixed-rate loans. Housing markets, already doing well amid...