Who's to blame?
Written by A Forex View From Afar on Thursday, January 10, 2008Back to www.thelfb.com
Bloomberg relates today that economists are starting to blame Alan Greenspan for today's housing bubble, for keeping Rates too low for too long.
``He's had a bubble reputation that derived from the growth of U.S. household wealth,'' said Edward Chancellor
Alan Blinder a professor at Princeton University and former Fed Vice Chairman says
``The Fed and the other regulatory agencies were slow on the draw,''
``They could have made this debacle substantially smaller, not by better monetary policy, but by better regulatory and supervisory policy.''
I tend to agree with them, monetary policy has its own limitation, a higher Interest Rate wouldn't have stop Sub-Prime, but neither would have it been so spread out as it is today; better regulations would have stopped sub prime. I guess Greenspan doesn't take all the fault for these. There are others to blame too; the S&P and Moody's maybe? They took forever to downgrade what many thought were smelly packages of LDO and CDO debts, but all the time that the ratings were high the Investment world were allowed to hold them.
I the mean time, I would blame Alan Greenspan for changing the way CPI is viewed, and by cutting out M3. I also would blame him for always trying to save Corporate, and not the Investors rear ends. I feel like that may be the same thing Bernanke may be seeing now; first save the big guys with racing boats and after throw air filled bags to small investors, maybe they can swim to the shoreline.
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Source: Bloomberg: Greenspan's Reputation at Risk as Recession Odds Grow
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