Now, Alan Greenspan has struck back at any notion that he — or anyone — could have known how or when to defuse the threats that triggered the crisis.
He argues in a new book, "The Map and the Territory," that traditional economic forecasting is no match for the irrational risk-taking that can inflate catastrophic price bubbles in assets like homes or tech stocks.
In an interview Sunday with The Associated Press, Greenspan reflected on his book, his Fed tenure and the risks that still endanger the financial system. Relaxed and looking fit at 87, he spoke for an hour in the sunroom of his house overlooking a wooded hillside of Northwest Washington. It's a home he shares with his wife, Andrea Mitchell, the NBC News anchor and chief foreign affairs correspondent.
Surrounded by books of presidential and financial history, Greenspan acknowledged some errors of judgment as Fed chair. But he said he saw no reason to downgrade his own assessment of his tenure.
"Our record was fairly good," he said.
He expressed relief at having finally ended an intense 18 months of work on his book. Now, it's on to talk-show chats with the likes of Jon Stewart and Charlie Rose.
He says he still plays tennis regularly — singles as well as doubles. And he seems as much a man of the 21st century as he is of the 20th: In search of his iPhone, he twice asked a staffer where it might be.
Reaching back nostalgically to the Republican administration of Gerald Ford, when he led the president's Council of Economic Advisers, Greenspan remembers a different Washington. He recalls it as a time when political leaders dared to trust their opponents and collaborated to reach common goals.
It didn't hurt, Greenspan said, that the Democratic speaker of the House, Thomas P. "Tip" O'Neill, would drop by the West Wing of the White House some nights "and have a bourbon with Jerry."
Here are excerpts of the Greenspan interview, edited for length and clarity:
Q: You write that you were shaken by the 2008 financial crisis because of the failure of one of the pillars of a stable financial market — "rational financial risk management." What did you discover in your research for the book about this issue?
Q: With the knowledge you gained from the financial crisis, has it changed your own assessment of how well you performed as Fed chairman?
Q: A lot of criticism centers around the failure of the Fed and other regulators to deal with the explosion of subprime mortgages, which were packaged into securities that then turned bad and were at the center of the troubles. Should the Fed have handled subprime mortgage regulation differently?
Q: You got to know Larry Summers during his eight years at the Treasury Department during the Clinton administration, and you also worked with Janet Yellen when she was a member of the Fed board. Can you talk about both of them? (Summers and Yellen were rivals for the Fed chairmanship.)
Q: On a more personal level, what books are you reading that you would recommend?
Q: Do you admire Coolidge?
Q: Any other books you would recommend?
Q: You're famous for your love of delving into the minute detail of economic statistics to help track the economy. One of your favorite statistics has been railroad boxcar loadings of autos and other manufactured goods. Are you still following that type of information?
Q: What advice would you give Yellen, who has served the Fed as a board member, president of the San Francisco regional bank and since 2010 as vice chair?
Q: The size of the Federal Reserve's balance sheet stands at a record $3.7 trillion, reflecting all the Treasurys and mortgage-backed securities the Fed has bought to push long-term interest rates down. You have expressed concerns about this size, which is more than four times where the balance sheet stood before the start of the financial crisis. What are your worries?
Q: You write that our highest priority should be to fix our broken political system. How?
He and his successor Bernarke both know very well that as long as made-in-China goods and illegal Latino labor are ridiculously cheap US inflation will be stable and they can keep on printing enormous amount of US$ to feed the debt spiral to satisfy the Socialist ruling elite.
He is also wrong about the US political system which now appears to be broken or dysfunctional but it is not. There is a simple explanation for the root cause of recent turbulences such as Government Shutdown and near Financial Default.
Fortunately for American people their forefathers have left a watertight Constitution filled with assortment of Checks and Balances so that their generations future will have a means to fight back such Leftist-Islamist Overlords who have been trying to enslave the people of not just the United States but the whole world through the so-called United Nations.)
Related posts at following links:
US Humongous Debt, Communist China, and Printing Money