Greenspan Book Laments Course of Bush and G.O.P.

Alan Greenspan, who chaired the Federal Reserve for nearly two decades, spanning four presidents, writes in a long-awaited memoir to be published on Monday that he was mystified over the abandonment by President Bush and Vice President Cheney, along with the Republican-controlled Congress, of their party’s principles on spending and deficits.

In the 500-page book, “The Age of Turbulence: Adventures in a New World,” Mr. Greenspan describes the Bush administration as so captive to its own political operation that it paid little attention to fiscal discipline, and he described President Bush’s first two Treasury secretaries, Paul H. O’Neill and John Snow, as essentially powerless.

Mr. Bush, he writes, was never willing to contain spending or veto bills that drove the country into deeper and deeper deficits, as Congress abandoned rules that required that the cost of tax cuts be offset by savings elsewhere. “The Republicans in Congress lost their way,” wrote Mr. Greenspan, a self-described “libertarian Republican.”

“They swapped principle for power. They ended up with neither. They deserved to lose” in the 2006 election, when they lost control of both the House and Senate.

http://www.nytimes.com/2007/09/14/business/15cnd-greenspan.html?hp

we all knew that, but some of us said it before it became fashionable.

for him - up to changing the recession date from November 2001 to November 2000 - so as to blame it on Clinton. I am sick and tired of disgruntled stooges...If he thinks he absolves himself of the responsibility of propping the little dictator, he's dreaming!

Greenscam is damn near as responsible as the chimp for the sorry state of our economy. He kept lowering interest rates throughout the entire bush first term in order to make it seem as though the tax cuts were yielding results. He encouraged the expansion of variable rate mortgages which led to the explosion of sub prime lenders.

It's funny to see this weenie pointing fingers at other pubs if for no other reason than a few might get pointed back at him by people who actually have memories.

Just go away Mr. free market. Eat shit and die.

Poppy Bush, Reagan, Lee Atwater, and the rest of the wingers who got us in this mess.

Security. He advised Reagan to raise the Social Security tax to fill it with lots of cash, and then had the government "borrow" that cash and replace it with government IOU's. This borrowed (looted) cash was used to pay for tax cuts for the rich. Then Greenspan "warns" that the Social Security cash reserves will run out unless we raise Social Security taxes or cut benefits. The cash reserves, before they grabbed a bunch and replaced them with IOU's, was supposed to cover payouts to about 2050. The problem with the Social Security fund only occurs if they don't intend to repay the IOU's.

Greenspan was also the genius behind the low interest rate scam. This scam worked in two ways to transfer money from the middle class to the rich people. First, the interest banks pay to depositors for savings accounts and CD's is pegged to the Fed's prime rate. However, the rate the banks charged to customers was whatever the "market" would bear. So, the spread left the banks with huge profit margins. Moreover, the rates for credit card debt were even higher, fourteen percent or more. So people who put money in savings accounts were cheated out of a lot of money. The interest paid to depositors should reflect what the banks earn on that money, not some arbitrary Fed rate.

Second, the unrealistically and arbitrarily low interest rates paid to bank depositors allowed scam artists in the stock brokerage firms to induce people to take their life savings out of federally insured savings accounts and invest in speculative stock ventures where they could lose their principal. "You're a sap to leave your money in the bank. Buy these wonderful stocks and earn a fabulous retirement in only a few years. Everyone else is. Don't be left out."

This rush to buy stocks is THE CAUSE of the rise of the stock prices, and the big DOW increases. What was occurring was stock price inflation. Throw money at any commodity, create a high demand, and the price has to go up, even if the company earns no profit. Even though Enron had no significant profit, the stock price rose because the executives were inducing people to buy the stock and thereby bid up the price. They bailed out before this "Ponzi" scheme, which was being played by many companies who doctored their books, became apparent in the stock market. The result is that many middle class people lost their savings to these corporate bigwigs.

The statement that really grates on one's nerves is this one:
"Mr. Bush, he writes, was never willing to contain spending or veto bills that drove the country into deeper and deeper deficits, as Congress abandoned rules that required that the cost of tax cuts be offset by savings elsewhere." It was necessary, implies Mr. Greenspan, to offset tax cuts for the rich by reducing funding for schools, scientific research, road and infrastructure maintenance (like bridges), health care (cut Medicare), and anything that benefits middle class or working class people.

Greenspan's low Fed interest rate was responsible for the housing market problems we see now, also. The huge profit margins achieved by banks and other lending institutions left a large pile of cash burning a hole in their collective pockets. This provided the incentive to make risky loans that are causing the problems in the housing markets.

Mr. Greenspan was as much an architect of the Republican "loot the country" scheme as any one. Now that Bush/Cheney popularity is down, he is trying to dump all the blame on them. Those of us who understand the economic games they play know that Greenspan is just as guilty of the sorry state of our economy as anyone.

Former Federal Reserve Chairman Alan Greenspan warns in his memoir that if the Fed is to keep the inflation rate between 1 and 2 percent in coming years it could be required to force interest rates into double digits, according to a report in the Wall Street Journal.

However, Greenspan said he fears the Fed will face "populist resistance from Congress, if not from the White House" to its policy of maintaining price stability.

He said if the Fed succumbs to that pressure, the inflation rate could rise to an average of 4 to 5 percent by 2030, and 10-year Treasury yields will rise to at least 8 percent with the potential to go "significantly higher for brief periods," the newspaper report said.

Greenspan criticizes the administration of President George W. Bush for putting political imperatives ahead of sound economic policies.

http://www.nytimes.com/reuters/business/business-greenspan-book-rates.html