Alan Greenspan: What I got wrong

(CBS News) Contrary to what many financial observers thought at the time, not every pronouncement by former Fed Chairman Alan Greenspan was on the money . . . and no one knows that better than Greenspan himself. He talks about that, and much more besides, with Anthony Mason:

The nation's capital narrowly averted a financial crisis this past week . . . and the man who steered the world's greatest economy for nearly two decades was worried.

"Well, it's the worst I've ever seen it," Alan Greenspan said of the discord in Washington, D.C. "And I've been in and out of Washington, oh, since the 1950s."

As Chairman of the Federal Reserve for 18 years, Greenspan worked with Presidents George W. Bush, Bill Clinton, George Bush and Ronald Reagan. Before that, he headed President Gerald Ford's Council of Economic Advisors.

And Greenspan remembers the battles the Republican president had with Democratic House Speaker Tip O'Neill:

"They were at each other's throats all day long, from 9:00 to 5:00," Greenspan said. "At 6:00, Tip would go over to the West Wing of the White House and have a bourbon with his old buddy, Gerry.

"That doesn't exist anymore."

"So in other words, you're not going to find a Democrat at a Republican cocktail party?" Mason asked.

"You can. But you have to look very hard."

When asked his opinion on shutting down the federal government as a political strategy, Greenspan said, "We're a democratic society. Shutting down the government should not be on the agenda."

As for flirting with default on the nation's debt, he said, "The whole system is based on trust. You break trust down, and the system implodes."

"So we're playing with fire?" Mason said.

"Indeed, we are."

When he left the Federal Reserve in 2006, America was in its greatest period of economic growth in our history. Greenspan was the economy's rock star, revered around the world. Even Cuba's Communist leader, photographed with Greenspan's memoir, was a fan.

"This is so inconceivable," Greenspan said of the photo of Fidel Castro holding a copy of Greenspan's "The Age of Turbulence."

He' s also been knighted, but is Sir Alan only in the United Kingdom, "and nowhere else."

But then came 2008. The housing bubble burst, Lehman Brothers collapsed, the stock market plunged.

"People were blaming you for what happened," said Mason.

"I didn't like it," Greenspan said. "Look, I'm a human being. I mean, when I get criticism like I got, obviously I don't like it. But you know, I got a lot of praise which I didn't deserve as well."

But one article in particular struck him: "It said basically, 'Do we economists know anything?' And it is a very legitimate question. Because if you don't know enough to capture the most extraordinary event, economic event, in all of our lifetimes, what in the world do we really know?

"It's like a mystery story to me. You know, how in the world did I miss it? And I said, 'I'm gonna find out why.'"