Greenspan Defends Low Interest Rates

Former Federal Reserve Chairman Talks To Lesley Stahl About Subprime Mortgage Meltdown

(CBS)  He got so close to Clinton and his economic team, that he began visiting the White House as often as once a month, something his predecessors had not done.

What was going on?

"Well, I was basically being an economic consultant," Greenspan says.

"But is that proper for the Fed chairman to become an economic consultant of the administration, given the need for the appearance of total independence?" Stahl asks.

"We are one government. The Federal Reserve is not the foreign enemy. I was very knowledgeable about lots of different subjects," Greenspan admits.

"You were influencing policy," Stahl remarks.

"I hope I was," Greenspan says.

That was behind the scenes; in public Greenspan was inscrutable whenever Congress asked about interest rates. He resorted to an indecipherable, Delphic dialect known as "Fed-speak."

"I would engage in some form of syntax destruction, which sounded as though I were…answering the question, but, in fact, had not," Greenspan admits, with a chuckle.

At one hearing, Greenspan said, "Modest pre-emptive actions can obviate the need of more drastic actions at a later date, and that could destabilize the economy."

"Very profound," Greenspan says, after listing to his testimony.

Greenspan personally worked on these "profound" comments.

"But what would often happen is you'd get two newspapers with opposing headlines, coming out of the same hearing," Stahl remarks.

"I succeeded. I succeeded," Greenspan says.

Chairman Alan became "St. Alan" during the robust Clinton years, getting much of the credit for the booming economy, budget surpluses, and soaring markets.

Greenspan became a rock star, with people even thanking him on the street for the growth of their investments.

Wall Street, whose profits soared during his tenure, loved Greenspan, too. They called him "easy Al" for his tendency to slash rates and make money cheap when the markets went down.

Greenspan's most criticized move as Fed chair came at the start of George W. Bush's term, when he supported tax reductions. His testimony, while careful, was read as an endorsement of Bush’s massive tax cuts.

"Having a tax cut in place may, in fact, do noticeable good," Greenspan said.

Greenspan had been saying that the surplus should be used to shore up Social Security and Medicare. But he writes that he came to favor a tax cut because he thought without one the surplus would get too large.

"Yeah, but why didn't you think that Congress would never have allowed it to get that far? Why wouldn't you think they would spend it on education, on bridges, on roads or whatever they do?" Stahl asks.

"Because they could have and the numbers were still large enough," Greenspan says. "I never explicitly stated that I was in favor of the Bush tax cut. That's what the Bush administration interpreted, but I never said... I was in favor of 'a' tax cut."

[secundus2]

I''m tempted to say that the current Greenspin is at odds with what Greenspun in the past.

[jampact]

Leslie Stahl takes one%u2019s breath away--because she interrupts w/ pointed,long-winded questions!
Interviewers who don''t pace themselves to a person%u2019s cadence, should be dismissed from interview. It EXACTLY like taking something out of a person%u2019s hand. Just as rude-plainly:difficult to listen to-this is NOT skillful interviewing. Cheap,demeaning, unsophisticated. I''ve had it w/ TV interviewers !I''ve have had it w/interviewers who call female congress members by her FIRST name, but then, reverently, refer to Mr. Senator, or CongressMAN Smith, while calling a female office holder the equivalent of %u201Chon%u201D. I have had it w/interviewers who bully a guest,trying to get a sound bite out of a trip of the lip--or worse. Did Bernard Shaw help Michael Dukakis lose the election by asking what he would do if his wife were raped? Interviewers need as much or more coaching than the people running for office.Obviously, Leslie Stahl has relied on her personal friendship and professional clubbiness to land this interview. Why wouldn%u2019t Andrea Mitchell give a friend the important "first week of the new book%u2019s plum interview". Ms Stahl took her familiarity too far by rudely interrupting a senior fellow who deserves our respect. No one could deny that he was masterful even if you didn''t like the tune--it was masterfully played.Go back to class Ms Stahl-you missed the basics. CBS should be embarassed by this interview--poorly done/poorly edited.

[sharncedar]

It will be worth Associating with Alan Greenspan because his name represents not only financial wisdom but an expansion toward environmental integrity.

Posted by tomtomasters at 10:57 AM : Sep 18, 2007

Tell that to me after the excessive liquidity has been wrung out of the system through massive asset price drops or massive inflation. I have a strong feeling that "tomtomasters " will suddenly pretend he was against Grubspawn in that day. Just as Grasscrud pretends now he was against big federal deficits, when he was the authority who assured Congress that the Bush tax cuts were prudent, that the federal deficit was in fact small and manageable.

Isn''t it funny how the truly evil, men like Greasepan, are able to cast a spell of almost hypnosis over the stupid? The stupid follow evil men like losers follow a stripper. "But look, bubba, he got all that maney, he must be worthy of our worship". I can''t even imagine the kind of stupidity it would take to admire Grabscam.

[sharncedar]

I only wish that what Alan Greenspan and I had in common were financial genius.

Posted by cookie-tg at 07:42 PM : Sep 17, 2007

Did someone shake the tress and the monkeys fell out? Whaaa? Alan Greedspud''s genius was *political* not financial. His special knack was to come out with authoritative sounding cryptic pronoucements that by no coincidence supported with presumed "economic" statements the current desired policy of whoever was in power, whether Clinton or Bush, whether Democrat or Republican. The man was the eptiome of the evil slimeball servant of the wealthy and powerful, like the slimeball counselor that tells the king whatever he wants to hear, or the evil prophets in the old testament that sang praises of the corrupt leaders.

Yes if you had the evil genius of Greedscum you would indeed likely be rich, and everyone around you left in ruins. Hardly something to aspire to.

[tomtomasters]

Republicanism is a party for the minority who are rich supplanting the backbone of America who is really the middleclass. They are never concerned about the country or people, only themselves and how much more control they can have.But the Democrats who managed to wipe out debt and gain surpluses never seen before; is a living testimony to the fact that working middle class are the folks who are responsible, can manage, have creditability, and are competent in concern to national financial systems. They go the extra mile to prevent the calamity of war. In hindsight it is an admirable characteristic.
I think Greenspan doesn''t need the Bernake job to shift markets. His word is gold and wisdom when the time comes for him to compare the Clinton vs. Bush legacies. Anything that indicates helping the middleclass in the markets are winners and movers becoming the driving forces out of the Bush or Republican conundrum.Huge markets are developing for secure renewable energy resources, especially environmentally conscious groups. Oil is becoming more of a protected resource due to declining supplies, and Air Pollutional Global Warming Factors. Iraq oil will become conservative reserves, in an attempt to provide long term social stability. They have no other resources, except sand.It will be worth Associating with Alan Greenspan because his name represents not only financial wisdom but an expansion toward environmental integrity.

[tomtomasters]

One could argue the stolen election was the cause to 911, because the dire poor in middle class societies outside of the US would suffer more under a Bush administration causing the disenfranchisement, but the story is not so clear really, when evidence shows clearly 911 was more than hijackers attacking the USA.
Specifically it was a plan to control Oil resources in a region that is quite volatile because there is no nuclear balance in the Middle East. Israel is the only country to have nuclear weapons and this is the threat to Arabs who have none, and can not have control over their own resources. Yes Alan Greenspan should be ashamed of himself; but in reality the turn of events do prove and show the American people the contrasting realities. In fact Greenspan will come out of this when he admits this, and influences people toward the Democratic principles that led and kept the country out of debt and out of war, which has been their trademark ever since their success in ending the Vietnam War.Even though a Republican ended the war in Vietnam his resignation proved the hard realities and forces vying on Nixon to uphold the MIC convictions, or support the greater ideology, The Parvenu Paroxysm Ambit.

[tomtomasters]

Greenspan is the kingpin purveyor of federalism that worked for the Clinton administration in being the voice of a factual testimony to its accumulating assets that brought the country out of years of accumulated deficits; gaining surpluses never seen before since after WWII. That is until the change in guard to the Bush administration that totally reversed the good times toward the bad with the highest in accumulated debt in US history.
One could argue that 911 and the war in Iraq were beyond the control of economic forecasters, but anyone with a gene of common sense is keen to point out that Personalities do make a difference when it comes to leadership and the direction of a country. Could we say President Bush was just unlucky? The truth of the matter is no. His father was involved in the first military action in Kuwait, with George Jr. having ties to the binLadin family, making them intimate players on the scene in concern to national security if Bush was elected. We know binLadin was instrumental in military campaigns in Afghanistan, making the relationship to the Bush United States a duopoly to the Military Industrial Complex. Once you start recognizing the over-bearance of MIC in any administration it spells doomsday market pressures.

[cookie-tg]

When we heard in the interview that Alan Greenspan as a boy memorized train timetables, morse code, and baseball statistics, my wife and I in unison exclaimed, "Asperger''s Syndrome!" These are classic symptoms.

I only wish that what Alan Greenspan and I had in common were financial genius.

[realpatriot1]

jowand,

How do you define inflation, oh wise one?

The Asian monetary crisis was caused by what Greenspan would call irrational exuberance among both lenders and investors. The Fed can''t control individual lending and investment decisions, that''s why we have an SEC. They certainly can''t control individual investors in foreign countries or the economic policy decisions of foreign governments.

They do have to respond to the effects of those decisions and Greenspan flooded the world financial markets with liquidity and cajoled major investors to hold their Asian shares before the Asian crisis spread worldwide.

The man made his share of mistakes but he also saved us from a global depression.

[rocket7771]

I can''t believe this was a 60 minutes interview. Where were the tough questions. This man headed up the largest counterfeiting ring in the world.

Why didn''t you ask where the money comes from when they add liquidity? They steal it from our savings. It''s called inflation. They are not the protectors of inflation, they are the single only cause.

And to show him signing autographs on counterfeit 1 dollar bills, like he was a rock star, how disgusting.

[marylouiseb]

I wonder why Greenspan would call Nixon anti-Semitic when Nixon saved Israel by immediately shipping arms when Gold Meir phoned him.

[sjc_1]

Two of the goals of the Fed are to watch inflation and unemployment. For most of his 18 years at the Fed, Greenspan has been watching inflation that was killed back in 1982 by Paul Volker. He restrained the growth of the American economy with his obsession on inflation that was never there and would never be there. In his final years, he wanted to make Bush and the Republicans look good with their deficit bloating tax cuts for the rich. It was only an illusion, not real expansion and we are all paying the price for that now and in the future.

[jowand]

Pointing a finger at Mr. Greenspan is not right.

The people responsible are the people who grant the loan as they know and knew what would happen to the morgage payments. Just like a car salesman trying to sell you a car you don''''t want.

If the banks go belly up let them as it is their own fault and they deserve it.

Bottom line is you don''''t grant loans to people that you know they can''''t repay.


--------------------------------------------------------------------------------

Posted by rharrin1 at 11:13 AM : Sep 17, 2007

Loans big enough to put the BIG banks under are guaranteed by the "Lender of Last Resort", the US Government: in other words suckers like you and me!

[jowand]

ihk,

The man did steer world markets through the Asian market meltdown, kept inflation at bay, and helped to keep rates stable during the longest economic recovery since post-WW2.

It''''s you who hasn''''t got a clue.


The Federal Reserve Banks and the European equivelent caused the Asian meltdown and the stock market dive in the US in the late 1990s. Who is it that make the big bucks during a recession? What is your definition of inflation, something worth your thinking about instead of just repeating this worn out word?

[jowand]

Yet, there is a run on UK banks, news not being reported here in the states...
Not since the great depression have images such as this been seen...

http://www.cbsnews.com/storie
s/2007/09/17/business/realestate/main326
7575.shtml

Not true you are making it up and hyping it as well.
Alan Greenspan and his monetary policies caused the recession and stock market dive in the late 1990s. It ook people 8 years to get their investments back after this. recession always follows hikes in interest rates and recovery always follows lowering interest rates. Who is it that controlls interest rates? Inflation by Greenspans own definition is keeping wages down, and the way the Federal Reserve, a private organiztation, has done this since its inception is through hiking interest rates until it cause a recession which cause high unemployement and pushed wages down. Controlling inflation is a code word for causing more unemployement. Go look at the historical charts for the last 50 years.

[realpatriot1]

ihk,

The man did steer world markets through the Asian market meltdown, kept inflation at bay, and helped to keep rates stable during the longest economic recovery since post-WW2.

It''s you who hasn''t got a clue.

[bareemperor]

Yet, there is a run on UK banks, news not being reported here in the states...
Not since the great depression have images such as this been seen...

http://www.cbsnews.com/stories/2007/09/17/business/realestate/main3267575.shtml

[pepperp1]

so libs are not so dumb after all..well we knew that but now you hear it form their own....well past the time to consider everything coming for the Right pundits class and the cultist is that what ever they say it is a lie, oh and their boy also offers up that deficits matter a great deal, and the this Administration has been by far the most reckless economically and only focused on politics.

History is done legacy is reflected as it was spin cnat help other than the poodle cult class, this is the Bush legacy, invasion that resulted in the deaths of tens of thousands for oil the end justifies the addiction never do the hard work and correct policy only play at the game of amoral politics instead.



the removal of Saddam Hussein had been "essential" to secure world oil supplies, a point he emphasized to the White House in private conversations before the 2003 invasion of Iraq.

Greenspan, who was the country''s top voice on monetary policy at the time Bush decided to go to war in Iraq, has refrained from extensive public comment on it until now, but he made the striking comment in a new memoir out today that "the Iraq War is largely about oil."

[ozonmojo]

He did not get it until late,he now says.The fact is he never got it because he is a typical Washington rat whom Reid,the Senate leader, once described as a mere partry hack.By attacking GW and the war the guy is obviously angling for a job in the new administration.This is one of the hazards of living too long.There is no end to overweening ambition.

[ihk88]

greenspan was clueless when he was fed chairman. It is sad people still listen to this still clueless and uber-greedy-social climber(someone else said). Oviously, he never did wrong. It is always someone else''s fault for this subprime fiasco and hopely not true recession. Shame on.