Very few think Alan Greenspan’s retirement was anything but a timely decision before his juggling act fell apart. Of course hindsight is clearer for most, but not for economists. A wonderful trait of economists is hindsight and foresight are often both in clear focus. For example, when HSBC bought predatory lender Household International, leadership at the time realized the deal was time sensitive. Make the money, make money for your friends, and retire before everything crashs around you. The time to retire is the most important critical goal, not the long term fiscal effects of your decisions. It is sound third grade logic, in practice by 8-year olds every day, although they are probably not thinking of retirement.
Many economists blame Greenspan for lax bank supervision and for keeping interest rates too low, too long from mid-2003 to mid-2004. That, the theory goes, fueled the housing bubble and spawned subprime and adjustable-rate mortgages for low-income people. As losses around the world near $200 billion (USD) it is hard to believe low-income people are responsible for all of it, or for that matter, more than 20 percent of it.
An unfunded war, a recession in late 2001 or early 2002, and Bush’s desire to spend everything Clinton saved and much more, seemed to signal that American’s needed to fund the country with the value previously locked up in their homes. Which class of people should carry the blame if Greenspan and federal regulators failed to do their jobs correctly? Lower-income people, of course. Let the finger pointing continue. Just like 8-year olds it will do no good. Perhaps we should listen to economists instead, but not those on the government payroll.
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